A big thank you to the FBAA for the great Broker Elevate event they hosted in Brisbane last week. It is always a fantastic opportunity to network with like-minded people while listening to some amazing speakers. While all the speakers were inspiring, one in particular caught my attention.
Nick Jenkins, Head of Debt Services at Equifax, gave us an overview of the latest credit trends in Australia, which were cross-checked with data from abs.gov.au (see below).
Personal finance increased slightly while car loans decreased in value in Q4 2022 compared to 2021, and we can note that travel and holiday related loan commitments increased to their highest level since late 2018.
In January 2023, the value of new mortgage commitments fell to $22.1 billion, 5.3% lower than the previous month and 35% lower than the previous year. This includes $14.7 billion in owner-occupied loans, down 4.9% from the previous month and 35.1% from a year earlier, and $7.4 billion in investment housing loans, down 6% and 34.8% from the previous month and year, respectively.
Recent interest rate increases coupled with the pressure of rising living costs have undoubtedly played a significant role in external refinancing, which has increased significantly in value over the past year, remaining close to the record level of $18.6 billion.
But while refinancing has become a popular trend, lenders' stricter lending policies and higher borrowing capacity buffers are likely to prevent borrowers from refinancing their home and/or investment loans. This will further increase the pressure on borrowers who, having benefited from a low fixed interest rate, will be faced with the reality of the variable interest rate market in the near future.
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