Australia’s home loan market saw a major shift in FY25, with a sharp rise in both new loans and refinancing. Why? Lower interest rates, strong employment, and first-home buyer support created ideal borrowing conditions, and Australians responded quickly.
As per the recent market report, over 95% of national home loan transactions took place, and here’s what happened then.
New Loans Grow Faster Than Property Settlements
Over 544,000 new property-backed loans were settled in FY25, and that’s up 6.8% from the previous year. And most of these were for residential properties, making up 96% of all loans.
Interestingly, this growth outpaced total property settlements, which rose by only 3.2%. This suggests that more buyers are now relying on new loans and refinancing. The reason is a tight household budget and the availability of more support for first-home buyers.
First-Home Buyer Support Extended
With support for first-home buyers extended, more are now entering the market. A shift that’s clearly impacting loan volumes. At most, states like Victoria and Western Australia saw high volumes of loan-backed purchases because of this.
State-by-State Loan Trends
While looking into the state-wise trends, this is what we found:
Victoria led the nation in new mortgage numbers, with over 148,000 loans settled, followed by Queensland and New South Wales.
Meanwhile, Queensland topped the charts for total property settlements, showing a broader spread of activity in that state.
Western Australia and Victoria also recorded the highest share of settlements involving loans, both at 77.2%. In value, they rose to $380.6 billion, including $346.4 billion in residential loans, indicating a 14% annual rise.
That means more buyers currently require borrowing support to make their purchases. And that’s why home loan activity is rising, both new and refinancing home loans.
Refinancing Activity by the Numbers
The refinancing activity continued to rise, as these figures show. By the June quarter, refinancing activity
- Rose 20.3% higher than the previous quarter
- 20.1% high compared to the same time last year
- And total refinances reached over 401,000 for the year.
States like WA (+14.7%), QLD (+7.5%), and SA (+5.9%) also led the way, while VIC saw a slight decline as earlier peaks began to normalise.
Interest Rate Cuts Improve Borrowing Rate
Two key drivers that actually pushed loan and refinance activity higher are
- Lower interest rates that led to higher affordability
- Stable employment and rising wages, which supported loan approvals
As a result, with job growth at 2.1% and wage growth outpacing inflation, more Australians felt confident taking on or restructuring debt.
Moreover, the pace of commercial lending also increased. While residential loans made up the bulk of FY25 activity, commercial lending also grew by 13.1% year-over-year.
What It Means for Borrowers Today
Recent data has clearly shown us how the housing market is shifting, and so is buyers’ behaviour. Borrowers are not only reviewing their loans, but they are also making proactive decisions.
That means if you want to refinance today, this is the perfect time. With rates lower and lenders competing harder, refinancing could help you reduce repayments, reset your loan term, or free up equity. However, it will only help if done right, considering your preferences backed by deep market analysis.
Need help in deciding? Book a discovery call at 1300 GET LOAN, 0456 456 267, or an appointment at Nfinity Financials.
