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The March quarter saw new loan numbers climb 5.7 per cent compared to the same period in 2024, reaching a total of 116,118.
While the March quarter is typically the quietest period for loan activity, research from Money.com.au highlighted some market recovery following years of stubbornly high interest rates.
Average new interest rates are now at 6 per cent. This is 0.24 per cent lower than 4Q24 and 0.28 per cent lower than 1Q24.
In response to improving conditions, total loans are up 10.5 per cent YOY, reaching 521,400.
The size of loans is rising too. The combined average loan size grew 8 per cent throughout the year, climbing $47,269 to a total of $652,366. This is a record-high average loan amount.
For owner-occupiers, the average loan size as of 1Q25 was $659,922, up 3.9 per cent from the last quarter and 8.4 per cent annually.
Investors, on the other hand, saw average loan sizes of $673,033, up 3.9 per cent from the last quarter and 7.9 per cent annually.
Investors are returning to the market in droves, with 19 per cent more activity from 1Q24, sitting just 3 per cent below record highs of June 2022.
Despite the strong activity, first home buyer growth “stagnated,” said Money.com.au.
First home buyer loans rose 3.8 per cent to 125,036 in the year to March 2025. However, this is 31 per cent below the September 2021 peak of 180,699.
Refinancing activity is also growing. While the total only saw a yearly increase of 1 per cent with 554,820 loans refinanced throughout the year, investors are leading.
Investor refinancing is now at a record high, reaching a total of 173,948 loans refinanced in the past year.
“We’re just shy of the investor loan peak set in 2022, but this time, the uptick in activity is happening in a very different rate environment. With rates falling from a much higher base and more cuts likely, many cashed-up investors see this as their window to strike before competition returns from owner occupiers and first home buyers,” said Money.com.au’s general manager of lending, Jacob Overs.
The state of Victoria is experiencing a shift in sentiment, with owner-occupier loans decreasing and investors filling the gap.
“Stamp duty concessions for off-the-plan properties have provided a lifeline for some investors buying new units and townhouses. At the same time, others are offloading their rental properties due to higher taxes in the state. But many of those homes are being picked up by first-home buyers as investment properties, thanks to their relative affordability,” said Overs.
Further, Overs said that new-build loans have dropped to decade lows due to high construction costs and build times. This is pushing buyers into existing properties.
“[Existing properties are] seen as lower risk and quicker to access, both of which are major advantages in today’s lending environment,” said Overs.
With the RBA rate cut providing some borrower relief and more expected throughout 2025, the momentum in loan activity seen in the last couple of years is likely to continue.
[Related: Borrowers more confident as home loan pressure eases]
