Borrowing appetite has cooled significantly after recent rate hikes and tax changes, with stress indicators edging higher.
Equifax’s Q2 Consumer Pulse has revealed mortgage inquiry volumes sliding into double‑digit decline, loan sizes shrinking across the eastern seaboard, and more households flagging hardship.
According to Equifax, mortgage demand in April–June 2026 tells a story of two starkly different periods.
In the months before the federal government’s housing tax reforms were announced, mortgage inquiries were running 3.7 per cent higher than a year earlier.
Yet in the two months after the March and May cash rate increases and tax changes to negative gearing and the capital gains tax discount, that picture reversed sharply, with demand 12.5 per cent lower year on year.
Equifax said the turning point was felt quickly across key borrower groups, with first home buyer inquiry volumes dropping 15 per cent in the post‑reform period.
The cooling extended beyond housing credit, seen in credit card demand, already in negative territory, easing further from a 2 per cent decline to a 4.8 per cent fall.
Personal loan inquiries swung from 5.5 per cent annual growth to a modest 0.4 per cent contraction, while auto loan demand deepened to a 6.6 per cent decline.
Equifax chief solutions officer Kevin James said the combination of rate rises and tax reforms had altered borrowing behaviour in a matter of months.
“The simultaneous arrival of the May rate hike and tax reforms have coincided with a decline in consumer borrowing demand during the second quarter of the year, which is in contrast to the growth and momentum we observed earlier in the year,” he said.
Smaller loans, shifting geography
Equifax’s analysis also revealed that loan sizes have been substantially impacted.
Between March and June, the national average mortgage inquiry amount fell by $8,000 – a 1.1 per cent reduction – with the steepest falls recorded in the major east coast capitals.
Average inquiry sizes in Brisbane were down $15,000, Sydney recorded a $12,000 drop, and Melbourne fell by $11,000, all outpacing the national average.
At a suburb and regional level, some pockets saw six‑figure declines in typical loan amounts: Canada Bay in Sydney posted a $145,000 fall, Melbourne’s Keilor dropped by $101,000, and Maroochy on Queensland’s Sunshine Coast saw a $119,000 reduction.
However, not all markets moved in lockstep.
Perth was the only major capital where mortgage inquiry values rose over the period, while non‑capital regional areas recorded a smaller $4,000 average decline.
James noted that the pullback in inquiry values signalled both caution and potential opportunity.
“While shrinking mortgage inquiry amounts likely reflect a broader market cooling, they also reveal emerging windows of opportunity for prospective buyers,” he said.
The data also showed that Perth and Adelaide currently sit at the lower end of the national spectrum for typical mortgage values, with Equifax suggesting these cities may be relatively more accessible for buyers weighing up where to enter the market.
Hardship edges higher, but early help rises
Overall, the number of accounts flagged as in hardship increased over the quarter, with mortgage hardship cases up 5.3 per cent and non‑mortgage hardship increasing by 5.6 per cent.
Yet hardship rates vary markedly by product, with personal loans recording the highest rate at 1.10 per cent, followed by auto loans at 0.82 per cent.
Credit cards, by contrast, remained the most resilient with a hardship rate of just 0.14 per cent.
Equifax said Victoria had emerged as a “hotspot” for financial stress, leading the country on both mortgage‑specific and total hardship rates at 0.78 per cent.
Equifax interpreted the rise in non‑mortgage hardship accounts as a sign that borrowers may be engaging earlier with lenders and hardship teams.
“The 5.6 per cent rise in non-mortgage hardship accounts likely signals responsible, proactive management,” James said.
“Equifax data indicates Australian consumers may be seeking assistance earlier, which aligns with mostly stable or slightly improved late-stage arrears observed across key credit types in Q2.”
[Related: Early hardship help drives stronger mortgage recovery]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
