- Queensland loan lodgements dropped 30% since January as interest rate rises impact buyer borrowing power.
- Investor activity saw the biggest decline, plunging 56% following four rate hikes and tax changes.
- Refinancing surged to 57% of all lodgements as homeowners look for lower rates to ease household budgets.
With September marking the fourth Reserve Bank of Australia (RBA) rate hike this year, the property market is slowing down as buyers and sellers face growing uncertainty.
According to Loan Market’s October loan trends report, Queensland loan lodgements (excluding refinancers) have dropped 30% since January, before the rate-hiking cycle began – higher than the national average fall of 24%.
“As property prices fall and interest rates climb, buyers are naturally taking a more cautious approach,” Loan Market credit expert Shay Waraker said.
“Higher rates directly reduce how much buyers can borrow, so many are choosing to wait and see if prices drop further before taking the plunge.”
While new lodgements have slowed across all buyer types, investors have pulled back the most.
On top of four rate increases, investors are feeling the squeeze from federal Budget changes to capital gains tax and negative gearing. Since January, investor loan lodgements in Queensland have fallen 56% – the steepest drop of any state and well above the national average decline of 44%.
Across Australia, investor lodgements for existing properties have dropped 56% since before the cycle began in late January. New property lodgements have also fallen, though by a smaller 10%.
In Queensland, first home buyer loan lodgements have dropped 18%, while lodgements for owner-occupier upgraders have fallen 15%.
At the same time, rising interest rates are motivating more homeowners to review their current loans and refinance.
“When rates rise, we consistently notice two trends: fewer new loan applications and a sharp increase in refinancing.
“Higher interest rates prompt mortgage holders to review their current loan – whether that means securing a lower rate or adjusting loan features to ease monthly repayments,” Ms Waraker said.
“Right now, families and homeowners simply want more breathing room in their household budgets.”
Driven by this trend, refinancing reached a record 57% of all Loan Market Group lodgements in September as brokers worked to help homeowners secure the right loan in a rising rate market.
