The major bank has significantly downgraded its credit growth forecast, signalling a deeper shift in borrowing conditions across Australia’s housing market.
National Australia Bank (NAB), Australia’s third-largest home lender, expects system-wide housing credit growth to slow to 2.5 per cent in the year to September 2027, with investor lending forecast to contract for the first time since 2020.
The new forecast, outlined in NAB’s third-quarter results on Monday (17 August), is markedly more conservative than the outlooks recently issued by its major-bank rivals.
NAB expects mortgage-market growth to fall from 6.7 per cent in the financial year 2026 to 2.5 per cent in FY27.
The bank is also forecasting investor lending growth to move from more than 8 per cent in FY26 to a 1.4 per cent contraction in FY27.
Owner-occupier lending is forecast to remain in positive territory in FY27, yet has also been significantly reduced, with NAB expecting credit growth of 4.5 per cent.
NAB’s projected 2.5 per cent growth rate is just over half Westpac’s FY27 housing-credit forecast of 4.7 per cent.
Westpac expects the market to slow from 6.8 per cent growth in FY26, while the Commonwealth Bank of Australia (CBA) has forecast growth of between 4 and 6 per cent.
Yet CBA’s CEO Matt Comyn later said the bank believed a figure in the range of 4–5 per cent was more likely.
Mortgage demand plummets since the budget
The revised forecast comes as investor demand appears to be weakening more rapidly than demand from owner-occupiers.
NAB said total Australian home-lending applications declined 15 per cent in the June quarter compared with the March quarter and were 16 per cent lower than a year earlier.
Applications from investors fell 17 per cent over the quarter, compared with a 14 per cent decline in owner-occupier lodgements.
Westpac has reported a similar split, with its average monthly mortgage applications declining 11 per cent over the June quarter to 29,000, while the lender’s post-budget run rate was 20 per cent below second-quarter levels.
Investor applications were down 26 per cent, compared with an 18 per cent decline among owner-occupiers.
CBA said its mortgage applications in June were 17 per cent lower than a year earlier, while Australia and New Zealand Banking Group reported a 12 per cent fall in applications between the May federal budget and the end of July.
Equifax recorded a fourth consecutive monthly decline in Australian mortgage demand in July, with overall demand falling 16.4 per cent year on year, following falls of 6.6 per cent in May and 18.8 per cent in June.
First home buyer (FHB) demand has been particularly soft, falling 19.1 per cent annually in July after a 20.9 per cent decline in June.
Warnings of deeper downturn grow
Financial commentator Alan Kohler said NAB’s forecast represented a substantial departure from the growth assumptions used by other major lenders.
“That is a big drop, it is substantial, it’s about half what the other banks are forecasting and it’s down from 7.5 per cent housing credit growth over the past year. I think what we are seeing is a big decline in the housing market and NAB is certainly forecasting that,” he said.
Kohler added that the significance of NAB’s estimate lay in what it implied for the scale of the wider housing downturn if the bank’s assessment proved correct.
“If NAB is right then the housing downturn is going to be a lot bigger than anyone currently expects,” Kohler said.
[Related: Home loan commitments plummet as investor lending slumps]
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.
