Aussies are refinancing bigger home loans as cost of living and interest rates bite
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The rush to refinance is well and truly underway in Australia – with interest rates, the cost of living and inflation having a very real impact on mortgage holders. This is unlikely to slow anytime soon off the back of a December cash rate hike.
The RBA today lifted the target cash rate by 25 basis points to 3.1% – but even ahead of this announcement, leading home loans marketplace Joust.com.au had already seen a significant increase in the size of refinance loans accessed through its platform.
Data from Joust’s Live Auction service showed a +6.15% increase in the size of loans accessed nationwide within the ‘Refinance’ category for the month of October 2022 ($540,149 average loan size), compared with the same month in 2021 ($508,838 average).
This growth in the size of refinance loans came at the same time that loan sizes for the purpose of buying and building new homes fell. Again, comparing October 2022 to October 2021, there was a -16.97% drop in the size of home loans accessed in Joust’s ‘Buy’ category (falling from $725,586 on average, to $602,430), as well as an -11.17% drop in loan size in the ‘Build’ category (down from $767,243 to $681,538).
Comparing data across Australian states, loan sizes for refinancing accessed through Joust saw the biggest jump in South Australia, where there was a significant +40.70% increase for the month of October up from the same month in 2021. This was followed by the ACT which saw a +20.82% increase in loan size, while NSW had a +13.00% increase. Over the same period loan sizes for the purpose of refinancing in Victoria felt a slight drop of -1.12% and in Queensland fell -7.20%.
Joust’s CEO Carl Hammerschmidt said, “The increase in people across most states looking to refinance larger home loans shows that those who got into the market during record low interest rates are now finding themselves over-extended. So while loan sizes for the purpose of buying and building fall, we’ve seen people with larger loans looking on Joust for a better deal as not only mortgage repayments spike, but so do things like groceries, petrols and other day-to-day expenses.”
This article was developed in collaboration with Joust, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.