Switching lenders drops back

Although switching banks to get a cash bank or better terms is still top of the list for many mortgage holders, it slipped back last month.

Monday, September 29th 2025, 6:00AM

by Sally Lindsay

Just over $1.9 billion of mortgages changed providers last month compared to $2.6 billion in July. This was an increase of 16.9% on a yearly basis, but down from 23.6% in July, the latest Reserve Bank data shows.

The share for changes in loan provider dropped to 26% per cent in August, down from 28.8% in July, while the average value for changes in loan provider dropped by 1.1% between July and August.

Overall, the number of new mortgages taken out in August was also down 16.4% from $9 billion in July to $7.6 billion. This was still a 22% increase on August last year.

Annual growth in the total value of new mortgages increased for first home buyers by 15.8%, owner-occupiers by 25.3% and investors by 19%.

The share of new mortgages taken out by first home buyers rose to 19.5% last month from 19.4% in July, but this was an annual drop from 20.5% in the same month last year.

For investors, their share dropped to 20.7% from 21.2% in July. This was an annual decline from 21.2% at the same time last year.

Owner-occupiers fared slightly better. Their share of new mortgages increased to 58.4%, up from 58.3% in July and on an annual basis was up from 56.9%.

There were 19,676 new mortgage commitments in August, down 14.2% from 22,930 in July. Compared to August last year this was an increase of 16.7% from 16,865.

The average new loan value across all types dropped to $384,077 in August, down 2.5% from $394,041 in the previous month. When compared to August last year, average values have risen by 4.6% from $367,297.

For top-ups the average loan value increased by 4.7% from July.

The number of new mortgages for property purchases increased by 13.5% and that of top ups increased by 18.2% when compared to August last year.

The value of new mortgages for property purchases increased to 58.5%, up from 57% in July and it also rose for top ups to 11.9% from 10.7% the previous month.

On the up
Meanwhile, Cotality says falling house prices are fuelling first home buyer momentum.

“We're seeing a clear shift in market composition, with first home buyers in their strongest position in two decades," Kelvin Davidson, Cotality chief property economist says.

First home buyers accounted for 27.5% of purchases over July and August, a testament to their resilience in the current climate, according to Cotality’s monthly Housing Chart Pack.

Investors also remained active, making up 24.6% of the market during the same period.

A key factor in this trend is improved affordability.

Low-deposit lending to all owner-occupiers remained subdued at just 12.9% in July, well below the 20% allowance.

“This indicates that with house prices softening, a larger number of buyers are able to enter the market with a more substantial deposit, reducing their reliance on high-LVR loans,” Davidson says.

“What might be discouraging for some property owners is beneficial for those on the other side of the coin.”

“With affordability better, listings starting to fall, and more existing borrowers repricing loans down to market interest rates, next year may look stronger for both property sales volumes and values.”

“The market is largely tracking sideways for now, but there are clear signs that momentum could build into next year.”

Property sales volumes fell for only the second time in 28 months in August, dropping by 5.2% compared to the same period a year ago.

It reveals that while the market is treading water, softening prices and improved affordability are creating valuable opportunities, particularly for first home buyers.

"The recent property value downturn, while a reminder of market caution, is creating a more favourable landscape for buyers," Davidson says.

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