Australians are increasingly cutting back, trading up loan sizes, and turning to refinancing in greater numbers after the three consecutive rate rises.
Mortgage Choice’s latest Home Loan Report has shown refinancing surging and spending being pared back as borrowers adjust to the three back-to-back cash rate hikes.
The report found that confidence had taken a major hit following the Reserve Bank of Australia’s move to raise rates in February, March, and May.
Mortgage Choice said half of prospective buyers now felt less confident about purchasing because of rising interest rates, up from 35 per cent in the previous quarter.
Commenting on the findings, Mortgage Choice CEO Anthony Waldron said the latest hikes had clearly unsettled would‑be buyers.
“With each new hike, buyers are having to reassess their property plans and find new approaches to saving and planning,” he said.
“However, for those who are already in a position to purchase, the market conditions may work in their favour.”
Despite the wobble in sentiment, purchase activity has not stalled.
Mortgage Choice’s submission data showed the value of home loan applications for purchases rose 16.6 per cent year on year over the March quarter, with South Australia/the Northern Territory up 21.6 per cent and Western Australia up 20.6 per cent.
Sacrifices mount as the ‘big squeeze’ sets in
The report highlighted how both aspiring buyers and existing borrowers were cutting back to make their numbers work.
Waldron said the survey’s sacrifice questions showed a clear reversal of last year’s easing trend.
“A year ago, the proportion of buyers and borrowers having to make sacrifices to save up their deposit or manage their mortgage was trending down. Now, sacrifices are trending up for both borrowers and hopeful buyers,” he outlined.
Four in five prospective buyers reported reducing spending to save for a deposit, up 10 percentage points in a single quarter.
The most common cutbacks were eating out less (37 per cent), trimming non‑essential purchases (34 per cent), cancelling or cutting entertainment (34 per cent), delaying holidays (28 per cent), reducing grocery or household essentials (27 per cent), and driving less to save on fuel (26 per cent).
For those already with a mortgage, two in three borrowers said they had scaled back day‑to‑day spending to keep repayments under control.
Refinancing gains pace as rates reset
Against that backdrop, refinancing has emerged as a key lever for households under pressure, with borrowers increasingly shopping around for lower rates.
The data showed refinance submissions climbing 18.7 per cent year on year nationally, with Victoria and Tasmania leading the way at more than 28 per cent growth in the value of refinance applications.
Waldron said borrowers were responding to the rate environment by actively searching for sharper deals.
“Our quarterly submission data shows that refinancing is gaining real momentum as borrowers respond to rising rates by shopping around for a better deal,” he said.
However, the report suggested many households are not fully engaged with their mortgage settings.
Waldron described it as an “emerging trend” that only 32 per cent of borrowers knew the interest rate they were currently paying, down from 40 per cent a year ago.
“Borrowers who aren’t across their home loan interest rate could be paying more than they need to,” he said.
“If you’re among the two-thirds of borrowers who aren’t across their current rate, I encourage you to have a chat with a mortgage broker who can help you assess whether your rate is still competitive.”
Borrowing more – with help from parents
Even as households trim spending, the data showed that borrowers were still taking out larger loans to compete in a tight housing market.
Mortgage Choice said the national average loan size rose almost 11 per cent over the year to the March quarter, an increase of nearly $68,000.
Every region reported growth, yet Waldron noted that South Australia and the NT recorded the “highest annual growth of any region”, with the average loan size jumping about $105,000–$694,633.
Borrowers in Queensland and Western Australia were also stretched, with average loan sizes in both states rising by more than $80,000 over the year.
For many first home buyers, the gap between incomes, deposits, and purchase prices is increasingly being bridged by family support.
Almost 45 per cent of first home buyer respondents said they expected financial help from parents.
Waldron said the survey underlined how sharply expectations now diverged between borrowers who could tap the bank of mum and dad and those who could not.
“The survey also revealed a stark difference in expectations for how long it will take to save a deposit, with 36 per cent of prospective buyers saying they expect it will take five or more years, and 31 per cent expecting it will take less than two years,” he said.
For parent company REA Group, these trends are evidently feeding through to earnings.
In its Q3 financial year 2026 results, REA said Mortgage Choice revenue benefited from a 21 per cent increase in settlements over the period, supported by “continued improvements in broker productivity” even as broker payout rates edged higher.
[Related: Borrowers’ buffers tested as another rate hike looms]
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