According to the PEXA Mortgage Insights Report released today, lower sale settlement volumes and prices drove the decline in aggregate lending to 12.7% to 461,979 over the 12 months last year.  

A total of $300.9 billion was borrowed in 2023 to fund the purchase of properties.

Conversely, refinancing activity rose 11.4% to 452,025 across the five mainland states, as homeowners, particularly borrowers with expiring fixed-rate terms, shopped for better deals on their mortgages. 

Property owners with existing loans refinanced a total of $220.4 billion in the previous year.

“Rising interest rates served to dampen buyer demand, whilst motivating existing owners to switch lenders to secure a better deal on their home loan,” PEXA head of research Mike Gill said. 

During the Covid pandemic when the cash rate hit all-time lows, the share of home loans on fixed rates made up nearly half of all new mortgages in mid-2021. 

However, as the RBA started raising the cash rate from 0.10% to 4.35%, the widely popular under-2% home loans skyrocketed to 5% and up. 

“Five official interest rate rises over the course of the year spurred property owners to refinance their mortgages,” Mr Gill said. 

“Many owners who had taken advantage of low fixed rate loans offered by lenders during the onset of the pandemic rolled off these loans in 2022 when the loan term expired.”

Refinancing up despite serviceability constraints 

ABS’ latest lending data showed Aussies borrowed less in December, with the total value of new loan commitments for housing falling 4.1% on seasonally adjusted terms. 

Owner-occupier loans plunged 5.6%, while investor loan commitments contracted 1.3%. 

External refinances topped $159 billion in 2023, in original terms, up from $143.6 billion in 2022, despite concerns around rate rises, mortgage prisons, and serviceability constraints.

According to the PEXA report, of the $613 billion worth of properties purchased nationally, $300.9 billion was borrowed in new lending, while the remaining $312.1 billion was paid in cash.

Falls in new residential loans were recorded in all five mainland states including NSW (down 8%), Queensland (down 11.8%), Victoria (down 13.2%), South Australia (down 13.6%), and Western Australia (down 5.2%). 

Mr Gill said the lower sale settlement volumes last year indicated “a slight improvement” in affordability, with buyers borrowing lesser amounts to fund purchases. 

Median loan values fell for the first time since the pandemic, with NSW and Victoria leading the drop to $647,000 and $497,000. 

Both states, as per the PEXA report, also led the lending decline after values fell to $109.5 billion in NSW and $84.1 billion in Victoria. 

Refinancing cools down in last quarter 

Refinancing activities heated up last year, with all five mainland states recording growth in total values. 

NSW and Victoria saw the highest total value of refinances throughout the year, at $79.6 billion and $71.9 billion, respectively. 

Meanwhile, WA had the most number of existing homeowners signing on their new refinancing agreement, accounting for 20.7% of the total volume. All other states also posted at least a 7% increase.

While refinancing grew strongly throughout 2023, volumes in the final quarter fell below expectations, suggesting a cooling down in activities after the RBA raised the cash rate to its current peak at 4.35%.

“Historically, rate rises stimulate refinancing activity as owners are motivated to look for a better deal on their home loan,” Mr Gill said.

“However, the timing of the rate rise, being close to the end of the year, may have prevented many owners from being able to act before the Christmas break."

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured Online ExclusiveUP TO $4K CASHBACK
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
Principal & Interest
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.04% p.a.
6.06% p.a.
Principal & Interest
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) repayments. All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here.

Monthly repayment figures are estimates only, exclude fees and are based on the advertised rate for a 30 year term and for the loan amount entered. Actual repayments will depend on your individual circumstances and interest rate changes. For Interest only loans – the monthly repayment figure is applicable only for the interest only period. After the interest only period, your principal and interest repayments will be higher than these repayments. For Fixed rate loans – the monthly repayment is based on an interest rate that applies for an initial period only and will change when the interest rate reverts to the applicable variable rate.

The Comparison rate is based on a secured loan amount of $150,000 loan over 25 years. WARNING: These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees together with costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products. Rates correct as of . View disclaimer.