Refinancing eases as the wider lending market loses momentum

The headline lending result was a sharp fall in new dwelling loan commitments. In seasonally adjusted terms, the number of new home loan commitments dropped 15.0 per cent to 111,878 in the September quarter, while the value fell 15.5 per cent to about $81.2 billion. The ABS noted that dwelling commitments exclude refinancing, which means the new-loan slowdown should be read separately from the switching figures.

For refinancers, the more relevant detail sits in the refinancing tables. Owner-occupier external refinances fell 3.8 per cent over the quarter to 63,475 commitments, while owner-occupier internal refinances fell 4.4 per cent to 41,905. In dollar terms, owner-occupier external refinances were worth $40.6 billion, still well above the $23.7 billion recorded for internal refinances.

Investor refinancing also softened. External investor refinances fell 6.0 per cent to 34,143 commitments, while internal investor refinances dropped 8.9 per cent to 13,936. That pattern suggests higher rates, tighter budgets and more cautious property expectations may be making some borrowers slower to switch, even though external refinancing remains a significant part of mortgage activity.

The practical takeaway is not that refinancing has lost relevance. Rather, the numbers suggest borrowers may be more selective. In a higher-rate environment, a lower advertised rate can matter, but it is only one part of the calculation. Switching costs, discharge fees, new loan fees, package fees, valuation outcomes, remaining loan term and whether costs are paid upfront or added to the loan can all affect the result.

Borrowers comparing options may find it useful to model different assumptions with a Home Loan Refinance Calculator, while remembering that calculator outputs are estimates rather than quotes, approvals or personal advice. It can also help to revisit the break-even point, because a saving that looks attractive month to month may take time to offset the cost of switching.

There is one important limitation in the data. The ABS has cautioned that internal refinancing values remain subject to reporting quality issues and may be revised. That makes the direction of travel useful, but it also means borrowers should avoid treating a single quarter as the full story. The more durable lesson is to review the structure, cost and flexibility of a loan regularly, particularly after a rate change or a shift in household income.