Data from conveyancing giant PEXA has revealed that more customers than ever are switching lenders when they refinance.

Refinancing has been undergoing a boom as a result of the record low interest rate environment, but the new data shows just how many are changing their mortgage providers when they get their new home loan.

The numbers reflect the extremely competitive home loan market and the new-found ease with which customers are able to change their mortgage providers.

“I’m sounding like a broken record, but we are breaking records every quarter in property it seems,” said Mike Gill, head of research at PEXA.

“It’s been a record for refinancing nationally: over 108,000 refinances in the September quarter. By that I mean external refinances, so when the homeowner has refinanced with a different lender.”

“That was up 30% on the prior quarter, which was already a really strong quarter so we were coming off a large base. Year on year, it’s a 50% increase. We’ve just seen a dramatic spike.”

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Gill explained that the drive to refinance was driven by the low interest rate environment – and the potential for it to end soon – but also because customers locked down in New South Wales and Victoria are having a longer look at their financial situation.

“We hear a lot of that now,” he said. “Even though the RBA says they won’t increase rates, our relatively strong recovery and inflationary pressures could see rates rise earlier than expected, and the fear of getting caught out has caused a lot of refinancing now to lock in low rates.”

“The other thing is that, during the pandemic, there’s been a lot of financial uncertainty and that does drive owners to look at their finances and mortgage repayments are a big chunk of your overall finances.”

“There’s a lot of competition among lenders too, with incentives such as cashbacks, for those who switch. That drives a lot of behaviour.”

The lockdowns in Victoria have driven the state to the top of the national refinancing rankings, with 38,000 people in that state alone choosing to swap lenders for a new home loan.

Australian refinancing hits another new peak

The data goes deeper: Victorian refinancers are disproportionately in the cities and in very specific areas of cities at that.

“Being at home, folks have time on their hands,” said Gill. “Refinancing is something that people think is worth doing, but they don’t have the time to do it, but when they’re at home all day, owners get around to it.”

“What’s really stood out is that a lockdown hasn’t hurt refinancing at all. Owners are thinking about it more. It’s been a lot more in metro areas as opposed to regional.”

“The hotspots are in the metro areas and lot of that is driven by higher city property prices, so owners tend to try to get the best deal they can, and also more competition among lenders. In regional areas, some lenders aren’t present or don’t have the exposure, so you see more competition in metro.”

“When you go into the detail and look at the suburb level, the suburbs that have the highest amount of refinancing in September were Tarneit, Point Cook, Craigieburn and Truganina: they’re more affordable suburbs.”

“They’re high development areas, with land estates and new constructions, so owners were moving into these newer properties and had a higher likelihood to refinance than those in existing suburbs closer to the city.”

“In New South Wales, Blacktown and Schofields made the top ten list, so again, you see the same high levels of new construction in those areas as well.”