Westpac reports 20% drop in mortgage applications after Australia scraps tax breaks
CEO says housing undersupply and population growth to partly offset rate, policy headwinds
Westpac Banking Corp reported a 20% decrease in mortgage applications, forecasting a significant 50% reduction in investor housing credit growth for next year. The Labor government's tax changes on property investors are adversely affecting demand in the Australian housing market. Westpac's shares dropped as much as 5.9% following the third-quarter update, setting a new daily record low since April due to investor fears of banks facing an uncertain trading environment.
The bank expects housing credit growth to drop from 6.8% in 2026 to 4.7% in 2027, with investor credit demand for housing also projected to fall from 9.1% this year to 4.5% in 2027. Westpac CEO Anthony Miller attributed the decline to the undersupply of housing and population growth, stating that these factors would partially offset higher interest rates and policy changes.
The outlook highlights potential challenges for Australia's top four banks, which dominate the mortgage market, as they heavily rely on home loans as a core profit source.
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