Fresh lodgement data has shown uneven momentum across states, with one market defying the broader cooling trend.
AFG’s Q4 FY26 Mortgage Index has laid bare a growing split between the major eastern states, where residential lodgements have edged lower, and Western Australia, which continues to post growth.
The aggregator reported that NSW remained its largest market, with $8.7 billion of residential lodgements in the quarter, followed by Victoria at $8.1 billion and Queensland at $5.2 billion.
All three, however, recorded declines on the prior corresponding quarter in the financial year 2025 – down 1.8 per cent in NSW, 0.6 per cent in Victoria, and 1.8 per cent in Queensland.
South Australia moved against that tide, with lodgements climbing 7.9 per cent year on year to $1.85 billion.
Western Australia, meanwhile, posted $4.21 billion in lodgements in Q4 and was the only state to grow both compared with the previous quarter (+0.6 per cent) and the prior year (+14.6 per cent).
AFG CEO David Bailey said the quarter’s pattern reflected borrowers working through recent fiscal changes rather than a fundamental weakening in appetite for housing finance.
“We believe the fiscal policy changes announced during the quarter will represent a period of readjustment rather than a structural shift in underlying demand,” Bailey said.
Loan sizes rise; leverage trends diverge
Alongside the volume shifts, the index showed that average mortgage sizes remained high.
In NSW, the typical loan lodged in 4Q26 grew to $806,189, from $778,628 a year earlier.
Victoria’s average mortgage increased to $693,905, up from $664,061 on the prior corresponding period, but a step-down from the previous quarter’s $706,949.
Queensland’s average loan jumped to $704,530, up from $648,597, while South Australia recorded a $684,879 average mortgage loan size, from $606,887.
Western Australia saw one of the sharpest moves, with the average mortgage climbing to $699,412 from $594,349 in a year – a rise of about $106,000.
NSW’s average LVR slipped to 63 per cent from 64.6 per cent, while Victoria held at 68 per cent.
Queensland’s LVR fell to 59 per cent from 61.9 per cent, while South Australia inched up to 63 per cent from 62.8 per cent.
Western Australia’s average LVR dropped to 60 per cent from 62.7 per cent.
Bailey on investor pause and WA’s growth
Bailey said the data pointed to investors being particularly cautious as they soak up the changes, yet added that the aggregator believed the pullback would be temporary.
“We have seen patchy investor volumes as the market absorbs the new settings, and the data is consistent with some borrowers pausing or reassessing plans,” he said.
“We view this as transitional, and broker demand has remained resilient.”
He also said that Western Australia’s results were emblematic of how local economic conditions and supply constraints could sustain mortgage flows.
“Western Australia’s continued strength, driven by its resource-sector economy and supply-constrained housing market, reinforced its position as a standout contributor to national volumes,” Bailey said.
[Related: Majors’ share slips as Westpac tops AFG lodgements]
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