Refinancing responsible for over 50% of lodgements at LMG

However, seasonally adjusted lodgements excluding refinancing fell a further 6 per cent during September’s final fortnight.

Loan Market said the headline improvement did not signal a turnaround in the underlying market.

“Sentiment in the housing market remains low, and there has been no recovery in underlying mortgage activity,” it said.

“The spike in refinancing activity indicates mortgage brokers are actively looking for better deals for their customers, helping to offset the impact of RBA rate hikes. This follows an increase in discounting by the banks over the last few months.”

Borrowers seek repayment relief

Loan Market chief financial officer Cherie Bell said refinancing’s majority share primarily reflected fewer buyers entering the market, alongside existing borrowers seeking financial breathing space.

“Refinancing is currently responsible for more than half of total loan lodgements primarily due to the decrease in new buyers to the market. Savvy consumers are exploring ways to save money on their largest household debt or access funds to free up cash flow,” Bell said.

She added that household pressures were also prompting borrowers to reconsider loan structures and features.

“With higher costs of living putting pressure on budgets and repayments continuing to climb, it isn’t just about looking for the lowest interest rate. Some home owners benefit from refinancing to a more flexible package or one with different features, such as an offset account,” Bell said.

“The last time we saw refinances making up a similar portion of loan lodgements was in late 2023 when many low-interest fixed rates expired. This was an environment where the cash rate had increased from 0.1 to 4.1 over the course of a year and households were looking for ways to better absorb the added costs.”

Investors lead the retreat

Investor lodgements dropped another 23 per cent from the end of June, taking their decline since the end of January to 45 per cent.

Meanwhile, first home buyer (FHB) and owner-occupier upgrader activity stabilised, although lodgements remained 13 per cent and 16 per cent lower, respectively, than at January’s end.

Investor demand diverged sharply by property type: lodgements for new homes fell 10 per cent from January, compared with 56 per cent for existing properties.

Total new-property lodgements declined 19 per cent from January, against 28 per cent for existing properties.

LMG also reported a 28 per cent decline in owner-occupier new-property lodgements, highlighting weakness after May.

New mortgage lodgement value in September’s final fortnight was 24 per cent below the end-January level, underscoring the gap between the refinancing-supported rebound and underlying demand.

Year-on-year comparisons also deteriorated, with total lodgement value averaging 19.3 per cent below the corresponding period across September’s final two weeks, while application numbers fell 23.6 per cent.

Across September, lodgement numbers were down 25 per cent.

LMG described declines as steady from May to July before accelerating in August, when weekly lodgements recorded an average 16.1 per cent decline.

It added that the final September fortnight registered the largest fall.

Investor lodgement value fell 47.4 per cent year on year across that fortnight, with LMG adding that weekly investor lodgements had been declining rapidly since July, averaging 40 per cent below corresponding periods.

Investor application numbers were down 49.8 per cent year on year.

The state breakdown showed Queensland lodgements down 30 per cent since January, followed by NSW at 29 per cent, South Australia at 26 per cent, Victoria at 20 per cent, and Western Australia at 11 per cent.

[Related: FHBs increasingly being edged out of new housing market]