Home loan refinancing rises as borrower switching accelerates
Competition for Australian mortgage customers is intensifying as more borrowers move their loans between lenders, with refinancing activity now representing about $1 billion of home lending switched every day.
Analysis by artificial intelligence-driven analytics firm Elula found about 664,000 home loan customers, carrying $371 billion in mortgage balances, changed lenders in the year to June 30. The amount switched was 13 per cent higher than in the 2024–25 financial year.
Elula’s figures suggest lenders are losing more than 1,800 mortgage customers a day in a market valued at $2.5 trillion, placing greater pressure on banks to retain existing borrowers while competing for new business.
Refinancing activity strengthens
Mortgage brokers are playing a significant role in the movement between lenders. The report says brokers arrange four in every five mortgages, giving borrowers greater opportunity to consider competing loan options.
Loan Market recorded a 16 per cent increase in refinance lodgements in August compared with the same month a year earlier.
Shay Waraker, a credit expert at Loan Market, attributed the increase to household budget pressure, larger loan sizes and three cash rate rises, which have encouraged some property owners to seek better pricing or restructure their loans.
Elula measures mortgage churn both when an existing borrower refinances to another lender and when a customer changes banks after moving property. Its analysis uses quarterly Australian Bureau of Statistics data covering banks and non-bank lenders.
Elula chief executive Josh Shipman said borrower switching was being driven by cost-of-living pressures, changes affecting negative gearing, rising interest rates and falling property prices.
David Bailey, chief executive of Australian Finance Group, said the switching activity reflected borrowers moving between lenders as rates, property prices and household budgets changed. He also highlighted the role mortgage brokers play in improving financial outcomes for borrowers.
Banks compete as lending growth slows
The increase in switching is occurring as overall mortgage growth shows signs of easing.
Australian Prudential Regulation Authority data cited in the report showed home loan growth was flat in July compared with June. Mortgage growth was running at 6.8 per cent year on year, but is expected to fall below 4 per cent in 2027.
UBS analyst John Storey said mortgage competition was likely to increase as loan growth slows, potentially creating pressure on banks’ net interest margins.
The report also noted Westpac cut mortgage rates in August following similar moves by Commonwealth Bank in June and July.
Macquarie analyst Carlos Cacho said housing credit growth remained at around 6 to 7 per cent but was showing signs of slowing. He said banks had reported application volumes falling by around 15 to 20 per cent in recent results and expected housing credit growth to slow further to 3 to 4 per cent in 2027.
Macquarie has also been expanding its mortgage book faster than the wider system. APRA figures cited in the report showed the bank grew at 3.9 times the banking-system average in the year to June 30 and added $39 billion to its loan book over the financial year.
Elula’s analysis also found nine in 10 property sellers moved to a competing lender for their next loan, highlighting the scale of customer movement across the mortgage market.
SOURCE ATTRIBUTION:
Based on reporting by James Eyers. Source publication
