A weaker mortgage pipeline at NAB has coincided with a lift in loans under closer repayment scrutiny.
National Australia Bank (NAB) has reported a sharp quarterly fall in home loan applications and a rise in early warning signs of borrower stress, as higher rates, policy changes and global uncertainty weigh on housing finance demand.
Releasing its third quarter trading update on Monday (17 August), the major bank revealed that total Australian home lending applications fell 15 per cent in the June quarter, compared with the March quarter, and were 16 per cent lower than a year earlier.
Investor applications declined 17 per cent over the quarter, while owner-occupier applications fell 14 per cent.
NAB chief executive Andrew Irvine said the softer mortgage market was emerging against a more difficult environment for households and businesses.
“The combined impacts of the Middle East conflict, higher domestic interest rates and recent tax changes in the federal budget are creating challenges and uncertainties for our customers,” Irvine said.
“The Australian home lending market softened in 3Q26 with our applications down 15 per cent compared with 2Q26."
Yet gross loans and acceptances reached $451.4 billion at the end of June, up 1 per cent from $445.7 billion three months earlier and 4 per cent higher than a year ago.
NAB also continued to increase the proportion of mortgage drawdowns completed through its proprietary channels.
Proprietary drawdowns accounted for 50.9 per cent of total drawdowns in the June quarter, up from 47.7 per cent in the first half of the 2026 financial year, as the bank pursues its strategy of strengthening direct home lending.
Early stress indicators rise
While NAB’s formal non-performing exposure ratio improved slightly, the bank flagged a lift in loans being monitored for signs of potential borrower difficulty.
Watch loans represented 1.17 per cent of gross loans and acceptances at June, up from 1.11 per cent at March, while housing loans more than 90 days past due increased to 1.01 per cent and those more than 30 days past due edged up to 1.63 per cent.
Irvine said the movement in watch loans signalled pressure among customers who were still performing on their obligations but could be vulnerable to changing economic conditions.
“While the ratio of non-performing loans declined over 3Q26, watch loans were higher reflecting current and potential stress impacting performing customers,” Irvine said.
The ratio of non-performing exposures to gross loans and acceptances fell by 2 basis points from March to 1.50 per cent at June.
At the same time, the ratio of default-but-not-impaired assets to gross loans and acceptances rose by 1 basis point.
Majors record falling mortgage demand
The slowdown at NAB adds to a widening post-budget trend of declining mortgage demand among the major banks.
Westpac recently reported that its average monthly mortgage applications fell 11 percent over the June quarter to 29,000, with its post-budget monthly run rate 20 per cent below second-quarter levels.
Investor applications at the bank were down 26 per cent following the budget, compared with an 18 per cent decline among owner-occupiers.
The Commonwealth Bank of Australia similarly reported that mortgage applications were 17 per cent lower in June than a year earlier, while Australia and New Zealand Banking Group said that applications fell 12 per cent between the May federal budget and the end of July.
[Related: NAB consolidates Ubank oversight and technology leadership]
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.
