- Western Australia loan lodgements fell 15% since January as interest rate increases affect borrowing capacity.
- Investor lodgements dropped 45% following four cash rate increases and federal budget adjustments.
- Refinancing hit a record high of 57% as homeowners search for the right loan to ease budget pressure.
With September marking the fourth Reserve Bank of Australia (RBA) rate hike this year, the property market is slowing down as buyers and sellers navigate growing uncertainty.
According to Loan Market’s October loan trends report, home loan lodgements (excluding refinancers) in WA have fallen 15% since January, before the rate-hike cycle began – staying well below the national average decline of 24%.
“As property prices adjust and interest rates rise, 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 property values drop further before taking the plunge,” Ms Waraker said.
Investors lead the slowdown in WA
While activity has softened across all buyer types, property investors have pulled back the most.
Along with four interest rate rises, investors are feeling the squeeze from federal budget changes to capital gains tax and negative gearing. Since January, loan lodgements from investors in WA have fallen 45% – the second largest drop of any state after Queensland, and just above the national average drop of 44%.
Across Australia, investor lodgements for existing properties have dropped 56% since before the rate-hike cycle began in late January. New property lodgements have also fallen, though by a smaller 10%.
In WA, first home buyer loan lodgements have fallen 15%, while lodgements for owner-occupier upgraders have remained stable.
Homeowners turn to refinancing for relief
At the same time, rising interest rates are motivating more homeowners to review their existing home loan and refinance.
“When rates rise, we consistently notice two trends: fewer new loan applications and a sharp increase in refinancing,” Ms Waraker said.
“Higher interest rates prompt mortgage holders to look closely at their options – whether that means securing a lower rate p.a. or adjusting loan features to ease monthly repayments. It is a good idea to consider comparing options to find the right loan for your situation.”
In the current market, families and homeowners simply want more breathing room in their household budgets,” Ms Waraker added.
Driven by this trend, refinancing reached a record 57% of all Loan Market Group lodgements in September as mortgage brokers worked to help homeowners secure competitive rates (eligibility criteria apply).
