Big Bank Mortgage Growth Collapses as Investors Retreat From Property Market
New home loan application growth has slowed sharply across major lenders, driven by recent Reserve Bank interest rate hikes and federal property tax changes. According to Canstar data insights director Sally Tindall, the combination of multiple rate increases and policy shifts has eliminated buyer momentum across the banking sector.
National Australia Bank reported that its total home loan book shrank by 0.01 per cent over a single month. Meanwhile, Macquarie saw its mortgage growth slow to 1.2 per cent. Application numbers have dropped significantly across the board, with Westpac noting a 20 per cent decline since the federal budget. Commonwealth Bank recorded a 15 per cent fall, and ANZ saw a 12 per cent drop once government assistance programs are excluded.
Lenders Launch Rate War Amid Investor Pullback
The sudden drop in demand has prompted lenders to compete aggressively for remaining borrowers. According to market data provided by Sally Tindall, 35 lenders have cut their variable rates since June 1. Currently, 52 lenders offer rates below 6 per cent. Major banks, however, have largely maintained higher rates amid warnings of potential central bank rate increases before the end of the year.
Among the major institutions, Westpac stands out as the only big four bank offering a variable rate under six per cent, sitting at 5.99 per cent. Smaller challengers are offering much lower rates, with Pacific Mortgage Group, LCU, and The Mutual Bank undercutting major competitors with variable rates as low as 5.69 per cent.
Credit Data Confirms Slower Investor Activity
Economic updates from major financial institutions confirm that the cooling trend is heavily impacting property investors. ANZ economists reported that the pace of investor housing credit growth slowed from 0.8 per cent month-on-month in June to 0.5 per cent in July. In their economic update, ANZ analysts stated that momentum is expected to ease further over the medium term. While owner-occupier credit growth has remained more resilient, analysts expect it to trend lower as well.
Did you know?
Major banks are facing intense competition from smaller mutual banks and credit unions, many of which are offering variable home loan rates well below the 6 per cent threshold to attract borrowers who are priced out of the big four.
Frequently Asked Questions
Why are big bank mortgage applications dropping?
Mortgage applications have fallen due to recent Reserve Bank interest rate hikes and new federal property tax changes, which have reduced buyer momentum and caused investors to exit the market.
Which big four bank has the lowest variable rate?
Westpac is currently the only big four bank offering a variable rate under 6 per cent, standing at 5.99 per cent.
Are smaller lenders offering better rates than major banks?
Yes. Smaller lenders such as Pacific Mortgage Group, LCU, and The Mutual Bank are offering variable rates as low as 5.69 per cent to capture market share from hesitant major banks.
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