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Equifax’s Quarterly Consumer Credit Insights: March 2025 report has revealed an annual increase of 5.2 per cent in mortgage applications driven by a “refinancing frenzy” as consumers expect the official cash rate to continue to lower.
Meanwhile, auto loan applications grew marginally, only by 0.3 per cent on the March quarter 2024, with overall secured credit applications rising by 4.3 per cent.
The research revealed an increase in consumer credit across all product types, with the largest increase being in buy now, pay later (BNPL) applications, which grew by 17.8 per cent on the March quarter 2024.
Overall, unsecured consumer credit applications grew by 5.5 per cent, comprised of the spike in BNPL applications, a 0.4 per cent increase in credit card applications, and a 5.7 per cent increase in personal loans.
According to Equifax, the year-on-year numbers revealed that the traditional gap in refinance market share held by investors compared to other borrower segments is broadening. The data revealed that nearly 80 per cent of total refinancing activity over March 2025 was from investors, making them twice as likely to refinance as owner-occupiers.
This has suggested that investors are potentially anticipating further rate cuts and demonstrates a “significant appetite for current economic conditions”.
Equifax’s chief solutions officer Kevin James said this rebound in mortgage demand is likely to continue, with refinancing “accounting for 37 per cent of mortgage demand in March”.
“Given the process of refinancing can take time, there will be a cohort of consumers who are planning to change their mortgage provider in the coming months,” James said.
“Additionally, the current turmoil in global markets created by ongoing tariff negotiations could see the Reserve Bank drop interest rates more frequently or by larger margins than originally expected.
“Anticipation of these rate cuts is likely to drive further demand for refinancing.”
The report further revealed that over 30 per cent of all refinance activity observed over the March quarter originated from already established mortgages taken out during the pandemic (between 2020 and 2021), when interest rates sat at the emergency level of 0.1 per cent.
Additionally, a large portion of present-day refinancing could also be attributed to borrowers who previously refinanced during the 2022–23 refinancing boom when the Reserve Bank of Australia (RBA) began aggressively tightening monetary policy.
While mortgage demand has increased, Equifax’s report also showed an increase in total mortgage limits in arrears, which has suggested that mortgage holders with larger loans are still falling behind in spite of February’s rate cut.
James said Equifax observed an increase of 9.2 per cent in the dollar amount now in 90-plus day mortgage arrears.
“This tells us that people with larger loans are struggling to keep up with payments and falling further behind,” he said.
“In fact, for the first time on record, mortgage loans exceeding $1 million are displaying higher arrears rates compared to all other loan size segments.”
[RELATED: New loans drop quarterly, but annual growth remains positive]
