Australia is facing a pronounced mortgage lending slowdown as rising interest rates continue to reshape the borrowing landscape. With higher costs and tighter lending conditions, new mortgage commitments have declined across housing and business sectors, signaling a shift in financial behavior.
For a deeper dive into how interest rates affect borrowing, visit our guide on and .
Key Loan Rate Trends – February 2023
According to the , seasonally adjusted figures for February revealed:
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🏠 0.9% drop in new housing loan commitments
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💳 1.1% increase in personal fixed-term loans
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🏗️ 62.2% surge in business construction loans (volatile segment), with a 1.1% rise in trend data
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🏢 2.0% decline in business loans for property purchases, with a 1.1% fall in trend terms
These figures reflect the broader impact of the mortgage lending slowdown on Australia’s financial system.
Housing Finance Market Cools Further
The Reserve Bank of Australia’s (RBA) interest rate hikes have intensified the cooling of the housing finance market. In February, the total value of new housing loan commitments fell by 0.9% to $22.6 billion, following a 2.4% drop in January.
Loan Type Breakdown
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Owner-occupier loans: ↓ 1.2% to $15 billion
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Investor loans: ↓ 0.5% to $7.6 billion
Since peaking in January 2022, total housing loan commitments have dropped by 33%, underscoring the depth of the mortgage lending slowdown.
Explore more on and their impact on housing.
First-Home Buyer Activity at Multi-Year Low
First-home buyer lending continues to decline. In February, new loans for this group fell 3.5%, following a 4.6% decrease in January. This marks the lowest activity level since May 2017, with lending now 27% below pre-COVID levels.
Learn how and access government support programs.
Refinancing Surges Despite Lending Decline
While new loan commitments are down, refinancing activity remains robust. In February 2023:
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Owner-occupier refinancing rose 3.5% to a record $13.6 billion
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External refinancing increased 2.7% to $19.9 billion (22.6% YoY growth)
Refinancing Growth by Segment
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Owner-occupier: ↑ 26.4% YoY
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Investor housing: ↑ 14.9% YoY
This resilience in refinancing reflects how borrowers are adapting to rising interest rates by switching lenders for better deals.
Check out our to compare lenders and save on repayments.
External refinancing growth continues to surge in Australia, even as new home loan commitments decline. In February 2023, borrowers increasingly turned to external refinancing to combat rising interest rates and secure more favorable mortgage terms.
External Refinancing Growth Surges to $19.9 Billion
According to the Australian Bureau of Statistics (ABS), external refinancing growth rose by 2.7% in February, reaching $19.9 billion in seasonally adjusted terms. This marks a 22.6% year-on-year (YoY) increase compared to February 2022. Despite a slowdown in new lending, external refinancing remains a strong trend among Australian borrowers.
Owner-Occupiers and Investors Fuel Refinancing Growth
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Owner-occupier external refinancing jumped 3.5% to a record $13.6 billion—up 26.4% YoY
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Investor housing refinancing rose 1.0% to $6.3 billion—up 14.9% YoY
This sustained growth in external refinancing reflects how Australians are responding to interest rate pressures by switching lenders for better deals.
Why External Refinancing Growth Is Accelerating
The rise in external refinancing growth highlights a shift in borrower behavior. With household budgets under strain, more Australians are refinancing externally to reduce monthly repayments and lock in competitive interest rates.
Want to reduce your mortgage costs? Use our Refinancing Checklist to compare lenders and make smarter financial decisions.
Key Takeaways
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External refinancing growth rose 2.7% in February 2023
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Owner-occupier refinancing hit a record $13.6B (↑ 26.4% YoY)
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Borrowers are increasingly switching lenders for better rates
