A brokerage network recorded $27 billion in loan settlements for the year to June 30, up 13% on the prior year, even as the Reserve Bank delivered three rate hikes and federal budget changes spooked sentiment. The settlement figure covers both new purchases and refinancing, and the question is which cohort did the heavy lifting, borrowers locking in better deals as their fixed terms expired, or cashed-up buyers still able to service debt at 4.35%.
The network’s parent company attributed the growth to resilient market fundamentals and strong consumer engagement, despite noting that volumes could have run higher without the May budget changes and the most recent rate move. Executives flagged that buyer sentiment took a hit in recent months but expect confidence to recover in the second half as uncertainty settles.
Who’s driving the volumes
Two forces are at work. First, the refinancing wave: borrowers who fixed at sub-3% rates in 2021 are rolling off onto variable products now sitting above 6%, creating an incentive to shop around. Brokers report steady activity from existing homeowners chasing lower rates or consolidating debt, often moving between lenders to clip 20-40 basis points.
Second, new buyer demand hasn’t collapsed. First-home buyers remain active, supported by the expanded Home Guarantee Scheme, which in October 2025 lifted income caps and property price thresholds. Brokers note that construction loan inquiries have picked up post-budget, as buyers price in the tax changes and move ahead anyway.
The split between refinancing and new lending isn’t disclosed in the settlement data, but broker feedback suggests refinancing is the larger driver in metro markets, while regional pockets are seeing more first-time construction activity.
The rate backdrop and serviceability squeeze
Three hikes in 2026 have pushed the cash rate to 4.35%, with variable mortgage rates now in the 6.2-6.5% range for owner-occupiers with a deposit. Serviceability buffers, the 3% add-on lenders use to test repayment capacity, mean borrowers are assessed at effective rates above 9%, shrinking maximum loan sizes by roughly 15% compared to late 2024.
Yet settlement volumes rose. That points to either borrowers with larger deposits (reducing loan size relative to property value), higher household incomes, or a shift toward refinancing where the loan amount stays flat or falls. It also suggests the borrowers still transacting are self-selecting: those who can’t service the debt at current rates have already pulled back, leaving a smaller but more creditworthy pool.
The catch
Settlement volumes measure loans that reached completion, not applications or approvals. A 13% rise in settlements could coincide with flat or falling approval numbers if more borrowers are completing deals started months earlier. Check your own pipeline: if approvals are softening now, settlement growth could reverse in Q3 and Q4 as the queue thins.
Budget impact and how brokers adjusted
The May 2026 federal budget introduced tax changes that temporarily chilled buyer activity, brokers describe a three-week lull immediately after the announcement. The budget didn’t directly alter lending rules, but it shifted sentiment and caused some buyers to pause while they recalculated after-tax cashflow and property affordability.
Brokers adapted by pivoting toward first-home buyers and construction clients, where government incentives partially offset the budget headwinds. One broker in Victoria noted that the October 2025 changes to the Home Guarantee Scheme, removing income caps and expanding eligible postcodes, brought in buyers who were previously locked out, and that cohort stayed active even as upgraders went quiet.
The construction angle is worth tracking: dwelling approvals have been falling, but brokers report that clients with land or off-the-plan contracts are still proceeding, often because walking away would forfeit deposits or expose them to vendor penalties.
What could stall this in the next six months
August RBA decision: another hike would push variable rates toward 6.6-6.8%, tightening serviceability further and likely pulling forward refinancing activity (borrowers rushing to lock in before the next move) while delaying new purchases.
Unemployment: the jobless rate sits at 4.1%. If it drifts to 4.5-5%, lenders tighten credit appetite and borrowers lose confidence, even if rates don’t move. Household spending recently lifted 0.8%, but that strength is concentrated in higher-income households, a weaker labour market would hit the marginal borrower hard.
Listing volumes: if vendors hold off listing because of budget uncertainty, buyer competition eases and settlement volumes could fall simply because there’s less stock changing hands. Traffic on listing platforms remains high, but traffic doesn’t equal transactions until sellers commit.
Scenarios over the next 12 months
Base case (60% probability): one more hike in August, then a hold through early 2027. Refinancing activity stays elevated as fixed-rate rollovers continue. New buyer volumes flatten but don’t collapse, supported by first-home buyer schemes and moderate price growth in affordable suburbs. Settlement volumes grow 3-6% year-on-year.
Upside (25%): RBA holds or cuts in H1 2027 as inflation cools faster than expected. Buyer confidence returns, upgraders re-enter, settlement volumes accelerate to 10-12% growth. Lending standards stay tight, so the growth comes from volume not looser credit.
Downside (15%): two more hikes, unemployment rises to 4.8%, and credit conditions tighten. Refinancing activity peaks then falls as fewer borrowers have equity to shop around. New buyer volumes drop 10-15%, settlement growth turns negative by Q2 2027.
Pressure points for brokers and borrowers
Brokers face rising compliance workload, complaints hit record levels recently, and lenders are taking longer to assess and approve, particularly for self-employed or complex income scenarios. Expect turnaround times to stretch from 5-7 days to 10-14 in competitive lending periods.
Borrowers need to pressure-test cashflow: if you’re refinancing to save $150/month but your variable rate could rise another 50 basis points in the next year, the saving evaporates. If you’re buying, model repayments at 7% even if you’re borrowing at 6.3% today, the buffer is your margin of safety if rates stay higher for longer.
For investors, higher settlement volumes don’t automatically mean rising prices. Volume can reflect churn (existing owners trading properties) rather than net new demand. Resale profit data shows 97% of sellers still made a gain, but the share of loss-making sales is creeping up in oversupplied apartment markets.
Tracking signals in real time
Watch weekly auction clearance rates and days-on-market in your target suburbs. If settlement volumes are rising but clearance rates are falling, it suggests more stock is moving via private treaty after extended campaigns, not competitive bidding, a sign of weakening urgency.
Monitor your own broker’s pipeline: approvals today become settlements in 60-90 days. If your approval just came through, settlement happens in September or October, and by then rates could be 25 basis points higher. Lock in your rate strategy now, don’t wait until settlement week.
RBA meeting dates: August 5, September 2, October 7. If the RBA signals a pause in August, expect a surge in refinancing inquiries as borrowers bet rates have peaked. If it hikes, expect a two-week freeze followed by a spike in fixed-rate applications.
What this means for your next move
If you’re refinancing, get three quotes before your fixed term expires, and compare total cost over 24 months (rate plus fees plus offset features), not just the headline rate. Most borrowers save 0.3-0.5% by switching, which is $1,200-2,000/year on a $400k loan, meaningful but not transformational.
If you’re buying, recognise that settlement volumes rising while listings are flat means competition per property is still firm in tightly-held suburbs. Don’t assume a higher settlement count means easier negotiations, it often means the opposite.
If you’re holding, the 13% jump in settlements suggests the market isn’t freezing despite rate rises, but that’s an average across all buyer types and all property segments. Drill into your local clearance rates and median days-on-market before assuming your suburb will follow the national trend.
Start here: if you’re within six months of refinancing, request a rate review from your current lender this week, many will match or beat a competitor’s offer to retain you, saving you the cost and paperwork of switching. If they won’t move, start the broker conversation now, because approval timelines are stretching and you want your new loan locked in before your fixed term ends.
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General info, not financial advice.
