CBA Sees 15% Drop in Home Loan Applications Since May Amid Rate Hikes and Budget Changes

Australia’s biggest mortgage provider, Commonwealth Bank…

Australia’s biggest mortgage provider, Commonwealth Bank, has reported a significant slowdown in home loan demand, with applications falling by 15% since May. The decline comes in the wake of three consecutive interest rate increases by the Reserve Bank and the government’s recent tax adjustments outlined in the federal budget.

The bank’s internal data, shared with analysts on Wednesday, reveals that the surge in borrowing costs and the budget’s changes to tax policies have dampened buyer appetite, particularly among first-time homeowners and investors. This marks a sharp reversal from the record-breaking levels seen earlier this year when property prices were soaring and low rates fueled a buying frenzy.

Industry experts suggest that the combination of higher mortgage repayments and reduced borrowing capacity is forcing many potential buyers to reconsider their plans or delay purchases. The Commonwealth Bank’s figures are seen as a bellwether for the broader housing market, given its dominant share of the home loan sector.

While the bank did not provide a detailed

While the bank did not provide a detailed breakdown of the decline, it noted that demand for fixed-rate loans has dropped more sharply than for variable-rate products, as borrowers anticipate further rate hikes. The trend mirrors a wider cooling across the Australian property market, with auction clearance rates and house prices beginning to ease in major cities.

Economists warn that the full impact of monetary tightening is yet to be felt, as many households remain on fixed terms that have not yet expired. The upcoming months will be critical in determining whether the softening in applications translates into a sustained downturn in property values.

CBA’s announcement adds to growing concerns about household financial stress, with many borrowers facing higher repayments while the cost of living rises. However, the bank remains cautious, stating that its mortgage portfolio performance continues to be solid, with arrears levels still low.

As the market adjusts to a new era

As the market adjusts to a new era of higher rates, all eyes will be on the Reserve Bank’s next moves and whether the government’s budget measures will provide any relief to prospective buyers. For now, the housing market appears to be entering a period of moderation, with lenders and borrowers alike bracing for further changes.