The mortgage demand slump has now spread across every state and generation, signalling a more entrenched lending slowdown.
Equifax, the major global consumer credit reporting agency, has recorded a fall in Australian mortgage demand for the fourth consecutive month, with July’s decline extending across every state and all borrower age groups.
Overall mortgage demand was 16.4 per cent lower year on year in July, following declines of 0.9 per cent in April, 6.6 per cent in May, and 18.8 per cent in June.
First home buyer (FHB) demand continued to weaken at a faster rate than the broader market, falling 19.1 per cent annually in July after a 20.9 per cent drop in June.
Equifax Australia chief solutions officer Kevin James said the slowdown had gathered pace after first emerging in May.
“In May, we observed a handbrake effect starting to slow demand, and June saw that trend accelerate,” he said.
James said the persistence of the decline indicated mortgage activity was moving beyond a short-term response to individual interest-rate decisions and towards a sustained environment of low demand.
“With July marking our fourth consecutive month in negative territory, the data indicates that mortgage demand isn’t just reacting to individual rate decisions – at this current stage it appears to be settling into a lower baseline,” James said.
“The key question now is how long this sustained lower activity will persist before consumer sentiment and borrowing capacity find room to recover.”
Demand retreat broadens
The July figures also revealed that the downturn is no longer confined to particular borrower segments.
Demand among Gen Z borrowers aged 18–25 fell 21.1 per cent year on year, while demand among Millennials aged 26–35 dropped 20.1 per cent.
Activity also declined among more established borrowers: mortgage demand fell 15.7 per cent among those aged 35–45 and 14.5 per cent among the 46–55 cohort.
Even the 65-plus segment, which had shown isolated signs of resilience in earlier months, recorded an 11 per cent annual decline.
The geographical picture was similarly uniform, with Queensland leading the states with an 18.6 per cent fall; ahead of South Australia, down 17 per cent; Victoria, down 16.7 per cent; and NSW, down 16 per cent.
Western Australia recorded the least significant decline, yet demand was still 12.8 per cent below its July level a year earlier.
Refinancing activity also remained constrained, slipping 15.5 per cent year on year in July after a 17 per cent decline in June.
However, the composition of that decline suggests the earlier rush among existing customers to renegotiate pricing with their current lender may be running out of momentum.
Same-lender refinancing dropped 22.4 per cent in July, following an 18.8 per cent fall in June.
By comparison, refinancing involving a move to another lender fell a more moderate 8.4 per cent.
James said established borrowers had earlier sought to improve their positions by seeking lower rates from their existing provider.
“Earlier in the year, many established home owners appeared to be actively de-risking their mortgages by renegotiating lower rates directly with their existing bank,” he said.
He added that the sustained fall in internal refinancing reflected both the completion of that repricing activity and a tougher lending environment for borrowers seeking to alter their facilities.
“The four-month drop in same-lender refinancing suggests that much of that initial repricing wave has played out. Today, stricter bank serviceability buffers and elevated household expenses mean fewer borrowers are actively seeking or qualifying to adjust their home loans,” he said.
[Related: Mortgage demand dives as hardship climbs]
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