Australian Finance Group, the biggest mortgage broker in Australia, said that refinancing had hit a record high of 37.2 percent of all mortgages arranged.
AFG’s latest mortgage index showed that lending by major banks such as National Australia Bank, Westpac, ANZ and the Commonwealth Bank, have declined to 82 percent this month from 91 percent in the previous year.
Mark Hewitt, AFG’s general manager of sales and operations, said that borrowers were searching for better deals now that competition in the mortgage market is improving.
"We went through a period where there were very few alternatives for borrowers as the second tier, or the banks outside the majors, had funding restrictions brought on by the GFC, which meant they weren’t really in the market to lend."
"That is freeing up somewhat…so we are seeing them come into the market with some quite competitive offers on price and product features," he added.
Mr. Hewitt said that second-tier lenders like Suncorp, ING and AMP were planning a fight back, after a flight to perceived safety during the economic downturn saw the major banks grow their share on the market.
"Now that we appear to be past that trouble and things have freed up again, competition opens up again and people are feeling much more confident about dealing with groups outside the big four," he said.
AFG also found that investors were returning in groups to the property market.
Loans to property investors for this month accounted for about 35.1 percent of all mortgages arranged, which Mr. Hewitt said is close to record highs.
First time homebuyers continue to decline, making up 10.4 percent of the overall market for new loans from last year’s 28.1 percent.
AFG, which assists one in every 10 mortgages in the country, said that demand for fixed loans were near the all time lows this month, with only 2.5 percent of the total buyers choosing to fix their mortgage.