Australia's Big Four Report Mortgage Applications Down as Much as 20% After Investor Tax Changes

Westpac reported a 20% fall in home loan applications and CBA and NAB 15% each, while the RBA said on 13 August that price declines are now broad-based.

Australia's four largest lenders, which between them write more than seven in ten of the country's mortgages, have each reported double-digit falls in home loan applications since the 12 May federal budget cut negative gearing and capital gains tax concessions for property investors. Westpac reported a 20% drop for the quarter ended 30 June. Commonwealth Bank reported a 15% fall, NAB a 15% decline in the June quarter against the prior quarter, and ANZ a 12% drop in the dollar value of applications between 15 May and 31 July, excluding its 5% Deposit Scheme business.

The central bank confirms the turn

On 13 August, Reserve Bank Assistant Governor Christopher Kent told an audience that "housing prices have declined in Sydney and Melbourne, with declines becoming increasingly broad-based" — the clearest official acknowledgement so far that the softening has spread beyond the two largest capitals. In the same speech, titled The Restrictive Stance of Monetary Policy, Kent noted that scheduled mortgage payments "have risen and are now close to their 2024 peak as a share of household disposable income", that housing credit growth has started to slow with a noticeable decline in new lending, and that auction clearance rates have fallen below their historical averages. He attributed part of the weakness directly to policy: the budget's tax changes "appear to have contributed to reduced demand in the established housing market by lowering the after-tax return from housing for investors".

What the lenders expect

ANZ's housing update models a peak-to-trough fall of as much as 14.5% in Sydney and 10.6% across the capital cities combined, with a recovery through the second half of 2027 that assumes 50 basis points of RBA cash rate cuts — a forecast that depends on an easing cycle the central bank has not signalled. Supply has moved in the same direction as the demand pull-back: capital city listings have climbed to a seven-year high on Domain's count, which means the stock competing for a shrinking pool of applicants is growing at the same time.

The counterweight

Not every input points the same way. The budget changes bear on investors specifically, by lowering the after-tax return on an established dwelling; owner-occupier demand runs through a different channel and is governed mainly by borrowing costs and income. Kent framed the downturn as both an expected response to the three cash rate increases delivered earlier in 2026 and a correction after an extended run of substantial price appreciation, with the cash rate now sitting around the top of the range of central estimates of the neutral rate.

Where the market stands on the numbers

Glopra's market data puts Australia at an average of $6,500 per square metre with a gross rental yield of 4.69% as of the 23 July snapshot — among the highest price levels and lowest yields of the 70 markets tracked, a combination that leaves little income cushion when capital values move against an owner. The bubble-risk score of 61 out of 100 sits at the bottom edge of the elevated band, reflecting valuation stretch relative to Australia's own history rather than any judgement about the next twelve months. Gross yields exclude the 30% effective rental tax rate applied to the standardised non-resident case.

Sources: Reserve Bank of Australia, speech by Christopher Kent, 13 Aug 2026 https://www.rba.gov.au/speeches/2026/sp-ag-2026-08-13.html; Savings.com.au (big four bank disclosures), 13 Aug 2026 https://www.savings.com.au/news/big-4-banks-reveal-mortgage-collapse

Market data: Australia