Since February, total mortgage lodgements from Loan Market brokers have dropped 26 per cent, with the nation’s smaller states and territories seeing a strong downturn.
A new report from major aggregator Loan Market Group (LMG) has revealed that Australian home loan lodgements have dropped 26 per cent since early February, when the Reserve Bank of Australia (RBA) commenced its latest rate hiking cycle.
According to the Market Report July 2026, which looks at loan application trends to June 2026, in value terms, lodgements have plummeted by 23 per cent since February 2026.
While the slowdown has been felt across every region, the analysis revealed borrowers in some states were pulling back more than others.
In number terms, the smaller states and territories by population (South Australia, Western Australia, Tasmania, the ACT, and the Northern Territory) have suffered a 32 per cent reduction in Loan Market Group mortgage lodgements since early February, marking the steepest fall nationwide.
Queensland followed closely behind with total lodgements falling 27 per cent by number, while also recording a 46 per cent plunge in investor lodgement numbers and a combined 41 per cent dollar-value crash, the largest of any state.
Meanwhile, NSW recorded a 25 per cent drop in lodgement numbers, while Victoria proved comparatively resilient with a 19 per cent fall by number, owing to prior softness already embedded in its market.
While market activity has cooled across all borrowing segments, investors have particularly pulled back.
Loan Market lodgements for investor loans fell 35 per cent in value terms as investors adjust to the combined weight of higher interest rates and the federal budget’s changes to negative gearing and capital gains tax (CGT). Investor lodgements for existing properties (which are no longer eligible for negative gearing) have plunged 40 per cent since early February, the data found.
Meanwhile, investor lodgements for new builds – which retain negative gearing eligibility – fell by just 15 per cent and remain 25 per cent above June 2025 levels.
However, there has also been a 23 per cent fall in first home buyer numbers and a 14 per cent drop in upgrader lodgements.
“Since prior to the beginning of the rate hiking cycle and the federal budget, Loan Market Group has seen its total lodgements decline by -23 per cent. The first two rate hikes appear to have caused an increase in volatility in LMG lodgements,” the Loan Market report said.
“It was around the third rate hike and the federal budget that we saw a change in trend... lodgements for the last two weeks of June were down 10.5 per cent on the prior comparative period.”
Despite the sharp downward trajectory since February, LMG noted that lodgement volumes remain elevated in a historical context, resting at levels broadly comparable to early 2025.
The latest dataset builds on a growing volume of data showing a cooling in the mortgage market. Earlier market observations reported by Australia’s largest broker aggregators including Loan Market, Aussie, and AFG, have highlighted a sudden and concurrent pullback among both first home buyers and property investors following the federal budget.
Figures previously released by Aussie Home Loans and LMG showed that buyer confidence had deteriorated rapidly across both cohorts following the 12 May budget announcement. Aussie reported a drop of more than 20 per cent in first home buyer lodgements alongside a 25 per cent decline in investor demand. LMG similarly recorded a reduction of 16 per cent for first-time buyers and 19 per cent for investors in June compared to pre-budget levels.
Leaders from both groups noted that rather than first home buyers stepping into the vacuum left by retreating investors, elevated interest rates, reduced borrowing capacities, and widespread exhaustion were causing all borrower types to adopt a cautious stance, with investors pivoting heavily toward new-build stock to preserve tax benefits.
This aligns closely with macro credit demand patterns identified by credit reporting bureau Equifax, whose Consumer Market Pulse report for June 2026 recently revealed a 14 per cent national drop in mortgage demand year on year, with no state or territory recording positive growth.
Mirroring LMG’s geographic trends, the ACT (-18.6 per cent), Victoria (-15.9 per cent), and NSW (-15.0 per cent) recorded deep double-digit drops in mortgage inquiries, while Western Australia proved relatively resilient (-8.5 per cent).
Similarly, 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.
Equifax highlighted a distinct generational divide – with younger borrowers aged 26–35 pulling back by over 20 per cent while older demographics held firmer – alongside a broader contraction in consumer debt, marking the first negative print for personal loan demand in 18 months as Australian households actively move to curb exposure to new debt commitments.
[Related: Mortgage demand ‘hits a wall’ as downturn gathers pace]
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