Mortgage demand is gathering pace, with Equifax data showing a 10% increase in August 2025 compared to the same month in 2024, outpacing the 5.2% year-to-date growth.
“Even if the RBA doesn’t announce any further rate cuts this year, we expect that overall mortgage demand will continue to grow as the impact of the existing cuts continues to filter through to the market,” said Moses Samaha (pictured), Equifax executive general manager.
Refinancing is leading the trend, with enquiries making up 35.98% of total mortgage demand in August – an increase of 34.9% on the year prior. According to Samaha, this suggests many borrowers were waiting until multiple cuts had been announced before acting on refinancing opportunities.
By contrast, new mortgage originations dipped, down 1.7% year-on-year in August and 2.3% year-to-date. Lower property listings were flagged as a likely contributing factor.
Looking ahead, Samaha said repayment capacity will be a key issue for lenders, particularly as more first home buyers enter the market with the support of the federal government’s expanded First Home Buyer Guarantee scheme, which allows purchases with just a 5% deposit.
“As more stock comes onto the market during the spring selling season, and prospective home buyers are given a boost by the government’s First Home Buyer Guarantee scheme, we might see affordability become less of a barrier for a short period regardless of whether the RBA decides to cut rates in September,” Samaha said.
The latest RBA decision added to the cautious outlook. The central bank yesterday held the cash rate at 3.6%, after cutting rates three times earlier in 2025 – in February, May, and August. RBA Governor Michele Bullock reiterated that while inflation is trending lower, stronger consumer spending could add to price pressures and delay further cuts. Inflation eased to 2.1% in June before edging back up to 3% in August, while unemployment remained low at 4.2%.
Affordability may ease temporarily, with REIA figures showing housing and rental affordability both improved for the second quarter to June, but Samaha cautioned that consumer trust in the building industry remains a major obstacle.
The latest iCIRT consumer survey revealed that around 40% of Australians are worried about the shortage of reliable and qualified builders, construction quality issues, and delays. Nearly nine in 10 said they fear builders may cut corners to save costs or deliver homes faster as the government pushes to meet housing supply targets.
Lower rates have yet to provide relief to many struggling households. In the second quarter of 2025, the dollar value of delinquent mortgage accounts climbed 10%, with borrowers holding loans over $1 million disproportionately falling into severe delinquency.
Samaha said arrears remain a reminder that, even with lower rates, many households are still stretched by high debt levels, rising costs of living, and uneven market conditions.
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