PEXA report shows shift in Australian loan market for FY24

PEXA Group’s latest Mortgage Insights Report has revealed significant changes in the Australian loan market during the 2024 financial year, marking the end of the refinancing surge driven by low-interest fixed-rate loans.

Key findings from the report include:

1. New loan volumes increased by 6.0% compared to FY23, with a total of 509,955 new property-related loans issued.
2. Refinancing activity declined by 11.9%, with 396,653 refinances completed in FY24 for loans valued at $211.2 billion.
3. Victoria led national demand for property loans with 136,461 new loans in FY24, despite more property transactions being settled in Queensland and New South Wales.
4. The June 2024 quarter saw a significant rise in new loans, with 141,872 issued – a 25.1% increase from the previous quarter.

PEXA Group’s Chief Economist, Julie Toth, said: “Rising interest rates and stagnant incomes posed challenges for many home buyers and borrowers in the first half of FY24. But as we moved through the year, resilience in the labour market and greater stability in interest rates helped to boost buyer confidence.”

Toth noted that Victoria’s high volume of new loans may be related to an exodus of property investors responding to rising state taxes and residential tenancy regulation changes, as well as a rising proportion of owner-occupier buyers.

The report attributes the growth in new loans in the June quarter partly to a weaker March quarter, influenced by earlier than usual Easter holidays that likely delayed settlements to April.

Looking ahead, Toth said: “FY25 is expected to see improvements in household confidence, consumption and investment, supported by income tax cuts, receding inflation, and real income recovery. As the property market adjusts to these changes, ongoing growth in loan and refinancing volumes is anticipated.”

The findings suggest a shift in property market dynamics as Australia moves beyond the economic disruptions of COVID-19 and the subsequent period of rapid interest rate adjustments.