Mortgage refinancing hit a record high in August, surpassing the record set in June 2020 when the Reserve Bank of Australia’s double rate cut impacted activity.
The Pexa index showed refinancing activity has steadily increased since 2019 with approximately 300,000 refinances completed in the past financial year, up around 10 per cent on the previous year.
Pexa Insight head of research Mike Gill said the index stood at 187 points for the week ending August 29, 2021, up 46.9 per cent on last year.
“Whether it is the forced downtime to reassess finances during Covid-19 related lockdowns, or speculation surrounding a potential interest rate rise as early as late 2022, refinance activity has reached new heights nationally,” Gill said.
“We anticipate a dip in property sale transactions as a result of the extended Covid-19-led lockdowns in New South Wales and Victoria, however, refinance activity is expected to remain elevated in the near future based on the current trend line.”
The reserve bank decided to hold the cash rate at 0.10 per cent this week, as the delta outbreak had interrupted the economic recovery.
Governor Philip Lowe said they would not increase the cash rate again, until actual inflation is sustainably within the 2 to 3 per cent target range, which was estimated to be in 2024.
“Housing prices are continuing to rise, although turnover in some markets has declined following the virus outbreak,” Lowe said.
“Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors.
“Given the environment of rising housing prices and low interest rates, the bank is monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”