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Fixing drops to new record low as borrowers hold their breath on rates

Eden Radford avatar
Eden Radford
- 5 min read
Fixing drops to new record low as borrowers hold their breath on rates

The proportion of borrowers opting for a fixed rate hit a new record low of just 1.40 per cent in March, according to ABS statistics.

The latest ABS lending indicators, released today, show just $664 million worth of loans opted for a fixed rate, out of the $47.5 billion worth of new and refinanced loans approved in the month of March.

February was the previous record low of just 1.44 per cent.

The peak in the popularity of fixing in Australia was back in July 2022 when 46 per cent of all new and refinanced loans opted for a fixed rate.

Proportion of new loans opting for a fixed vs variable rate, last 3 years

Fixed vs Variable

Source: ABS Lending Indicators, original data. Based on the value of new and refinanced loans funded in the month.

Refinancing drops to lowest level in over two years

The value of refinanced loans dropped by 2.5 per cent this month, down to $16.02 billion – the lowest level since January 2022.

The drop comes following a mass exodus from the cashback market, with Westpac subsidiaries St George, BankSA and RAMS announcing today they will also be wrapping up their cashback incentives.

Value of loans refinanced in March

AmountMonthly changeYear-on-year changeTotal refinanced since start of hikes
$16.02 billion

lowest since Jan 22

-$414 million-$5.31 billion$427.45 billion
-2.5%-24.9%

Source: ABS lending indicators, seasonally adjusted data.

New lending roars ahead, fuelled by higher prices

The value of new mortgages continued to pick up pace in March, led by investors which saw a 3.8 per cent increase from the previous month, in seasonally adjusted terms.

Compared to the same time a year ago, investor lending has risen by an astounding 31.1 per cent, while owner-occupier lending has risen by 11.4 per cent.

The sharp rise in new lending is likely to be primarily fuelled by rising property prices, with the ABS noting that the number of new loans approved was ‘broadly similar’ to the results from last March, in original terms (seasonally adjusted data not available).

Value of new mortgages: March

AmountMonthly changeYear-on-year change
Total$27.64 billion+$839 million
+3.1%
+$4.20 billion
+17.9%
Owner-occupier$17.48 billion+$470 million
+2.8%
+$1.79 billion
+11.4%
Investor$10.17 billion+$369 million
+3.8%
+$2.41 billion
+31.1%

Source: ABS lending indicators, March 2024, released 3 May 2024, seasonally adjusted data.

First home buyers

Amount in MarchMonthly changeYear-on-year change
Number of new loans9,918+427
+4.5%
+897
+9.9%
Value of new loans$5.19 billion+$218 million
+4.4%
+$789 million
+17.9%

Source: ABS lending indicators, March 2024, released 3 May 2024, seasonally adjusted data.

Average loan sizes

Average new owner-occupier loan sizes largely increased across the country this month, with notable gains in the Northern Territory, South Australia and Western Australia from the previous month.

Since the start of the rate hikes, the average loan sizes have risen in five states and territories, with the biggest increases recorded in South Australia (+11.1%), Western Australia (+10.7%) and Queensland (+8.4%), despite the 13 RBA rate hikes.

Only New South Wales, Victoria and the ACT have seen the average new owner-occupier loan sizes drop since the start of the hikes.

Average new loan sizes - owner-occupier mortgages

AmountMonthly changeSince start of rate hikes
Australia$607,963+$9,339-$3,191
+1.6%-0.5%
NSW$744,101+$22,502-$41,934
+3.1%-5.3%
VIC$590,475-$12,667-$46,793
-2.1%-7.3%
QLD$571,954+$10,329+$44,502
+1.8%+8.4%
SA$519,165+$18,231+$51,880
+3.6%+11.1%
WA$521,863+$15,859+$50,374
+3.1%+10.7%
TAS$461,961+$24,882+$14,183
+5.7%+3.2%
NT$461,538+$32,042+$35,026
+7.5%+8.2%
ACT$579,259-$49,152-$17,062
-7.8%-2.9%

Source: ABS lending indicators, original data. Owner-occupier loans only, excludes refinancing.

RateCity.com.au research director, Sally Tindall, said: “Fixed rates continue to sink to new lows as borrowers wait with bated breath to get a clearer idea of what the RBA’s next move will be.”

“The refinancing storm is well and truly over, with the value of loans switching to a different lender in March dropping to just $16.02 billion,” she said.

“While in dollar terms there is still an impressive amount of loans jumping ship, it’s the lowest level since well before the start of the rate hikes and yet another sign the refinancing market is settling into a much cooler new norm.

“The value of new loans approved in March has risen sharply since the same time a year ago, as buyers battle it out to place the winning bid on a limited amount of stock.

“Investor lending, in particular, has risen by a massive 31 per cent compared to the same time a year ago, despite the fact we’ve had three more RBA hikes within this time.

‘It’s amazing to see what the lure of potential capital gains can have on the market,” she said.

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Product database updated 20 Jun, 2024

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.