New mortgages, refinancing centred in capitals: PEXA

The pivot towards regional and rural Australia that was observed over the COVID-19 pandemic could be nearing its end, with new data released by Property Exchange Australia (PEXA) suggesting there was a rise in new loans and refinancing across capital cities over the March 2022 quarter. 

According to the digital settlement platform’s latest Mortgage Insights Report, 128,425 new loans were recorded over the three-month period, with Victoria (38,619) reporting the highest quarterly growth in quantity and Western Australia (-4.3 per cent) experiencing the smallest loss experienced by four states reviewed by PEXA. 

NSW (-23 per cent) and Queensland (-20.6 per cent) experienced the biggest freefalls over this time frame – a drop said by PEXA as an expected seasonal dip. 

However, the report also noted that the top 10 locations for new loans over the March quarter were focused towards greater capital cities, with NSW and Western Australia reporting nine out of their 10 spots being metropolitan, and Victoria noting eight. 

Queensland was the only state to see a rise across its greater boundaries, with three of the top 10 new loan locations being situated within Greater Brisbane. 

Refinancing, which too saw a seasonal dip quarter-on-quarter but a significant surge over March, was also reportedly centralised in metropolitan Australia, with the top 10 postcodes for refinancing in Victoria, NSW and Western Australia all being within Greater Melbourne, Sydney and Perth. 

The findings reflect PEXA data released earlier this month, which reported an increase in settlements across Greater Melbourne, Brisbane and Sydney outperforming regional areas in volume growth.

PEXA Insights’ head of research Mike Gill suggested at the time that, due to a significant lifting of lockdown restrictions across the country, “Australian homebuyers have refocused on the metropolitan regions in Queensland, New South Wales and Victoria”.

Non-majors continue as major players

According to the same data, this prodigal return to capital cities was accompanied by non-major banks continuing to dominate new loans and refinancing. 

As per PEXA, non-major banks were again preferred over the March quarter in Queensland and Western Australia, while also becoming preferred for Victoria. 

The big four are currently on equal level with the non-majors, with the majors dropping as least preferred over the quarter before spiking over February and March. 

For refinancing however, non-majors surged in popularity over the quarter to be the distinctive first choice for all four states. 

According to Mr Gill, this trend was driven by the “major banks increasing fixed loan rates in expectation of interest rate rises, together with non-majors competing strongly on variable loans”.

“We suspect borrowers were also attracted to non-major lenders, with many, as widely reported, offering quicker approval times and increased likelihood of loan approval,” he added.

[Related: 2022 sees home buyers ‘return to the capitals’]