Australian mortgage applications have fallen by approximately 20 percent [1], according to data from Westpac Banking Corporation.
This decline suggests a significant cooling of the housing market as potential borrowers react to shifts in federal fiscal policy and borrowing costs. The trend indicates that a growing number of Australians may be priced out of the market or are choosing to delay home ownership.
Westpac said the drop in applications has occurred since the federal budget in May 2024 [1]. That budget introduced property-tax reforms that the bank said have discouraged borrowers from seeking new loans [2]. These reforms targeted the property sector as part of a broader economic strategy by the Labor government.
Beyond tax changes, the borrowing environment has become more restrictive this year. There have been three interest-rate hikes implemented so far in 2026 [3]. These increases raise the monthly cost of servicing a loan, further reducing the pool of eligible applicants.
The combination of higher taxes and rising rates creates a double pressure on households. While tax reforms change the long-term viability of property investment, the rate hikes impact immediate affordability for first-time buyers.
Westpac's findings highlight a broader trend of caution within the national mortgage market. The bank said the decline reflects a shift in consumer behavior following the government's budget interventions [2]. As the market adjusts to these new parameters, the volume of new home loans continues to reflect a cautious approach from the public.
“Mortgage applications have fallen by 20 percent [1]”
The simultaneous impact of tax reform and monetary tightening is creating a significant barrier to entry for Australian homebuyers. By reducing the incentive for property investment through tax changes and increasing the cost of debt through rate hikes, the government and central bank are effectively slowing the growth of the housing bubble, though this may also hinder residential mobility and first-home ownership.
