By Scott Murdoch and Rajasik Mukherjee
SYDNEY, Aug 10 (Reuters) – Australia’s second-largest lender Westpac Banking Corp reported a 20% fall in mortgage applications and forecast investor housing credit growth to halve next year, as the Labor government’s tax changes weigh on property demand.
The bank said total housing credit growth was expected to slide to 4.7% in 2027 from 6.8% in 2026, citing higher interest rates and policy changes. It projected a slight improvement from owner-occupied credit demand to push the total credit growth to 5.2% in 2028.
But investor credit demand for housing would fall from 9.1% this year to 4.5% in 2027 and 4.4% in 2028, according to a bank presentation.
Housing demand has weakened substantially since the government scrapped generous tax concessions to property investors, a headwind for Australia’s top four banks as they control more than 70% of the national mortgage market and count on home loans as a core profit engine.
The 20% fall in mortgage applications was double the decline Westpac reported in the weeks after the government announced its tax changes.
Rival National Australia Bank said last month its mortgage applications had fallen 15% in the past three months.
“The undersupply of housing combined with population growth is expected to partially offset the impact of higher interest rates and recent Federal Government policy changes on the housing market,” said Westpac CEO Anthony Miller.
The lender said households remained under pressure from higher living costs, though business investment and overall customer resilience continued to support activity.
Westpac reported cash earnings of A$1.8 billion ($1.27 billion) for the quarter ended June 30, down from A$1.9 billion a year earlier.
The bank said its core net interest margin was broadly stable during the quarter, while its lending and deposit books rose 2%, reflecting broad-based growth across the Australian portfolio.
Its common equity tier 1 capital ratio stood at 12.1%, remaining comfortably above regulatory requirements and providing balance sheet flexibility.
($1 = 1.4162 Australian dollars)
(Reporting by Scott Murdoch in Sydney and Rajasik Mukherjee in Bengaluru; Editing by Nick Zieminski, Chris Reese and Sonali Paul)
Comments