Australia's mortgage market has hit its weakest patch since 2023, with APRA figures for July showing total home loan books grew just 0.2% — the slowest monthly pace in three years.
This time round, the RBA has hiked rates far less aggressively than in 2023, when it moved 12 times, four as double hikes — but the slowdown has been compounded by the federal government's property tax changes.
The deceleration follows three RBA rate rises during 2026 and the tax announcement together, a combination that appears to have pushed would-be buyers to the sidelines.
The slowdown was uneven across the big four. NAB's mortgage book actually shrank by 0.01%, its first contraction since July 2024, while CBA and ANZ posted the strongest growth among the majors at 0.3% each. Macquarie, which has averaged monthly growth of around 2% over the past year, slowed sharply to 1.2%. Total system-wide lending now sits at $2.51 trillion.
The pullback in new lending appears to be flowing through from application volumes reported earlier by the banks themselves. CBA reported a 15% drop in new mortgage applications since the May budget, Westpac reported a 20% average decline in applications over the same period, and NAB reported a 15% fall in the value of applications for the June quarter. ANZ said its application values were flat, but only because of its recent entry into the Home Guarantee Scheme — stripping that out, applications fell 12%.
This deceleration may not be over: the RBA's next decision, due 29 September, has NAB forecasting a further 25 basis point rise, with ANZ and CBA both tipping a hike in November — meaning today's lending slowdown could extend further before it eases.
Investor lending bore the brunt of the slowdown, rising just 0.1%, or $1.1 billion, in July — the smallest monthly increase since February 2024. Owner-occupier lending held up better by comparison, growing 0.3%, though this too was the slowest pace since mid-2023.
With fewer borrowers in the market, competition among lenders for the remaining pool of applicants has intensified. Canstar tracking shows 35 lenders have cut at least one new customer variable rate since 1 June, and 52 lenders now offer at least one variable rate under 6%. Westpac is currently the only major bank with a sub-6% rate on offer.
Canstar data insights director Sally Tindall said the market has clearly cooled.
"The mortgage market hit the brakes in July with the smallest rise in three years," Tindall said.
She pointed to opportunities for brokers' clients willing to look past the big four: "While the big banks are holding out on paper, mid-tier and challenger lenders are actively cutting variable rates to fight for a shrinking pie of mortgage applicants."
As Tindall put it, "If you're willing to look beyond the majors, there are genuine deals on the table."
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
