New data shows that the number of people paying off mortgages in New South Wales has hit an all-time high as blocked homeowners use their savings to pay off their mortgages, refinance home loans for a cheaper deal, or trade their homes.
More than 27,000 home mortgages were discharged from NSW in July, up 37.1% from July 2020, according to the NSW Land Registry Service.
Last year’s figures are up 12.3% compared to July 2019.
This comes at the same time that the home mortgage loans registered with NSW Titles are also hitting record highs. Only 29,000 home loans were registered in July, up 41 percent from July 2020.
The booming real estate market has been a hub of activity since most of the country emerged from isolation last year. This recovery was driven by owner-tenants, with a record number of first-home buyers entering the market and existing homeowners trading up or down.
Jerry Goldfried, director of analytics and analytics at the NSW Land Registry Service, said the record mortgage origination and registration numbers were driven by very strong home sales and record refinancing rates.
Joe Masters, chief economist at EY Oceania, said the household sector has amassed a huge savings fund, leading to high activity in the housing market.
“Households are awash with cash,” said Ms Masters. “Turnover was at a 19-year high and 45% above pre-COVID levels. When you have a high turnover rate, you will have a high rate of paid out and new mortgages. ”
Whether households are entering the market for the first time, paying off mortgages, or simply switching from variable to fixed interest rates, low interest rates have also stimulated much of the market activity, Ms Master said.
Shane Oliver, chief economist at AMP Capital, also said the market has moved forward thanks to record household savings over the past year, which has helped many households pay off their mortgages faster or in full.
“People were full of cash. Most Australians kept their jobs, and their income was supplemented by JobKeeper, said Dr. Oliver. “The fact that most Australians have spent this money on their mortgages may well be well spent.”
He said it could also be indicative of increased investor demand, which was a segment of the market that began to grow based on home loan data shortly before the Sydney Delta outbreak.
But CommSec senior economist Ryan Felsman said not everyone benefited from the pandemic’s restrictions last year.
“Like everything in the pandemic, we are seeing an increase in inequality. Those who survived save more and pay off their debts, ”said Mr Felsman.
“Then on the other side. Certainly. we saw evidence during bouts of difficulty when we saw how loan deferrals and requests for help increased as well. “
More than 18,106 home loans are now deferred at four major banks, up nearly 20% in the week to August 15, according to the Australian Banking Association.
Mr Felsman said that many households that managed to keep their jobs were in better financial position, and some were even able to expand their real estate portfolio in the regions.