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Record number of Aussies refinance as new home lending plummets

Record number of Aussies refinance as new home lending plummets

Today’s figures from the ABS show new home lending plunged $2.15 billion in May, the biggest monthly drop ever recorded.

The ABS lending indicator statistics show new home lending dropped by 11.59 per cent, month-on-month, according to the seasonally adjusted data.

Refinancing, however, hit a record high – the number of external refinances increased by 29.19 per cent from April to May, and 63.10 per cent, year-on-year, according to the seasonally adjusted figures.

Value of new loans% change % change
Apr 2020 – May 2020May 2019 – May 2020
Total housing

-$2.15 billion

-11.59%

$290.7 million

1.80%

Owner occupiers

-$1.39 billion

-10.16%

$842.3 million

7.34%

Investors

-$758.80 million

-15.61%

-$551.60 million

-11.86%

Notes: Seasonally adjusted figures. Figures exclude refinancing.

Source: ABS lending indicator statistics for May 2020, released 9 July 2020.

External refinancing% change % change
Apr 2020 – May 2020May 2019 – May 2020
Number

29.19%

63.10%

Value

27.47%

91.61%

Notes: Based on the number and value of new loans to owner occupiers using seasonally adjusted figures.

Source: ABS lending indicator statistics for May 2020, released 10 July 2020.

RateCity research director, Sally Tindall, said the drop in home lending was a result of the COVID-19 restrictions in April, as new home loans typically take a number of weeks to settle.

“Today’s figures show just how hard COVID-19 hit the housing market during lockdown,” she said.

“May recorded the biggest monthly drop in the value of new home loans settled, as vendors pulled the pin on listings, and on-site auctions were banned for weeks.

“While we could see a small rise next month in response to a lifting of COVID-19 restrictions, it’s still likely to be a long road ahead for the home lending market.

“Refinancing, however, went through the roof in May, as homeowners looked for quick ways to reduce expenses and get into a better financial position.

“Mortgage holders sick of paying an excessive loyalty tax are capitalising on the record low new customer rates on the market.

“Banks have been inundated with refinance applications, with some unable to keep up with the demand seeing processing times blow-out,” she said.

Refinace home loans

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

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