Major banks feel housing chill as mortgage growth slumps to three-year low

The double whammy hit of higher interest rates and the Federal Government’s property tax shake-up have brought mortgage applications to a three-year low.

The slowdown in the property market has hit major banks’ mortgage books, according to the latest data from regulator the Australian Prudential Regulation Authority data revealing the number of home loans have slowed.

While residential mortgages still grew in July, it was a relatively anaemic at just 0.2 per cent, comparison website Canstar highlighted. This was the slowest pace since July 2023, when the cash rate was at 4.1 per cent after 12 hikes.

National Australia Bank’s mortgage books fell 0.01 per cent, the first drop since July 2024, while Commonwealth Bank and ANZ’s grew 0.3 per cent — the biggest increase among the majors. For CBA, it was the slowest pace since February 2025.

Macquarie Bank, which has posted monthly gains at an average rate of 2 per cent over the past year, slowed to just 1.2 per cent.

It’s the latest read on the nation’s cooling housing market. It comes just weeks after recent revelations from the Big Four banks of double-digit declines in mortgage volumes, with the Reserve Bank’s three interest rate rises, changes to capital gains tax concessions and negative gearing, and economic uncertainty from the Iran war all being tipped as key factors.

“While we haven’t seen as many hikes as there were back in 2022 and 2023, the double whammy of a rising cash rate and the Federal Government’s property tax changes has brought mortgage applications to a crawl,” Canstar data insights director Sally Tindall on Monday said.

“The silver lining for active home buyers is that this slowdown is forcing lenders out of their comfort zone.

“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.”

Rate tracking by Canstar showed a total of 35 lenders have have cut at least one new customer variable rate since the start of June, with the total number of lenders offering at least one variable rate under 6 per cent at 52.

While the big banks have yet to cut new customer variable rates on paper, rival Macquarie has, although Westpac is the only one of the nation’s five biggest banks offering a rate under 6 per cent.