Westpac Says Mortgage Applications Fell 20% After Tax Break Changes
Synopsis
Australia's second-largest lender said federal tax reforms have dampened housing demand and expects investor housing credit growth to halve next year, although population growth and chronic housing undersupply should continue to support the market over the longer term.
Westpac mortgage applications were down 20 percent following changes to tax breaks for property investors in Australia’s May Budget as the lenders predicted a drop in property investor housing credit growth.
Mortgage applications were down 11 percent in the June quarter and 26 percent in investor applications from the time before the Budget, with 18 percent fewer owner occupied lots in the same period, according to Westpac.
Investor Lending Forecast to Slow
Westpac expects the growth in property investor housing credit to slow from 9.1 percent in 2026 to 4.5 percent in 2027 and 4.4 percent in 2028.
It also predicts that total housing credit will contract by 6.8 percent in 2026 and 4.7 percent in 2027 before posting growth of 5.2 percent in 2028.
The changes to negative gearing and the capital gains tax on existing homes from the federal government take effect from July 1, 2027, and transitional measures apply if the existing investment is affected.
Household finances were resilient to the pressures from the cost of living, said Westpac chief executive Anthony Miller. But at the same time, mortgages were being squeezed by uncertainty over interest rates, according to Westpac chief financial officer Nathan Goonan.
National Lending Data Shows Weaker Quarter
The Australian Bureau of Statistics’ latest data showed that new dwelling loan commitments were down 6.2 percent to 139,794 in the March quarter. New dwelling lending fell 3.8 percent to $103 billion, but it was 18.5 percent higher than the same time last year.
Commitments for incorporations were down 5.3 percent to 57,342 but were 18.8 percent higher than the previous year. Owner-occupier commitments were down 6.9 percent and first-home buyer commitments were down 4.3 percent.
Westpac made $$1.8 billion in cash for the quarter, compared with A$1.9 billion in profits for the past fiscal year. The bank posted a 2 percent increase in loans and deposits and recorded a capital ratio of 12.1 percent.
Meanwhile, mortgages at NAB fell by 15 percent year-on-year, according to Reuters, as mortgage lending slowed due to hikes in interest rates by lenders and changes in tax laws affecting most lenders in Australia.
Source: Reuters
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
