Refinancing applications are set to continue rising, with lenders increasingly targeting existing clients from competitors amid heightened scrutiny over new loans, according to ME.
According to ME’s general manager of home lending, Andrew Bartolo, credit providers are increasingly on the lookout for refinancers, with competition for low-risk borrowers intensifying amid increased scrutiny on new loan applicants.
“As credit demand falls, lenders are focusing more on refinancers. We’re seeing an increase in lenders competing to poach customers from other banks with promotional offers,” Mr Bartolo said.
Mr Bartolo’s view is reflected in the latest Housing Finance data from the Australian Bureau of Statistics, which revealed that the number of refinancing applications increased by 1.5 per cent in seasonally adjusted terms and the value of refinancing approvals rising by 2.4 per cent.
The November jump followed a sharp 13.1 per cent increase in the number of refinancing applications in the previous month (October 2018) and a 13.9 per cent rise in their total value over the same period.
The spike in refinancing approvals, however, has coincided with a decline in overall value of housing finance applications, which dropped 2.5 per cent in November 2018, plunging 32.8 per cent year-on-year.
Market analysis have attributed the drop-off in demand to tighter credit policies imposed by lenders off the back of prudential measures and scrutiny from the financial services royal commission.
ME’s general manager of markets, John Caelli, expects lending measures to tighten further ahead of the release of Commissioner Kenneth Hayne’s final report in February.
“Credit assessment standards have increased as banks become more detailed in assessing borrower expenses,” Mr Caelli said.
“With the release of the final royal commission report on the horizon, we anticipate the increased scrutiny of expenses and credit applications generally to continue.”
[Related: Loan approvals fall across the board]