Mortgage Demand Softened in Line with Tax Reforms and Rate Hikes

SNAPSHOT: EQUIFAX CONSUMER CREDIT ANALYSIS – Q2 2026

• Mortgage demand reversed sharply in Q2 2026 (April–June 2026), flipping from +3.7% year-on-year (YoY) growth pre-reform (March–April) to a -12.5% YoY contraction post-reform (May–June 2026).  
• National average mortgage loan sizes contracted by $8,000 (-1.1%) between March and June 2026, led by drops in Brisbane (-$15K), Sydney (-$12K), and Melbourne (-$11K).
• Financial hardship accounts rose quarter-on-quarter (QoQ), with mortgage hardship up +5.3% and non-mortgage hardship up +5.6%. Personal loans posted the highest hardship rate (1.10%), while credit cards remained the most resilient (0.14%).

SYDNEY – 4 August 2026 – Q2 2026 analysis by Equifax Australia into consumer credit trends highlights how households are navigating ever changing economic conditions. In the two months following cash rate increases in March and May, alongside tax reform changes relating to negative gearing and CGT discounts, Equifax data showed that mortgage demand in Australia has swung from +3.7% YoY growth pre-reform to a -12.5% YoY contraction post-reform. The shift was felt almost immediately across major borrower segments with First Home Buyer enquiries falling -15% YoY during the post-reform period. 

Equifax also observed that the cooling effect also extended into general borrowing, with credit card demand declining further to -4.8% from -2%, personal loan demand sliding from +5.5% growth pre-reform to -0.4% post-reform, and auto loan demand deepening its decline to -6.6%.

"The simultaneous arrival of the May rate hike and tax reforms have coincided with a decline in consumer borrowing demand during the second quarter of the year, which is in contrast to the growth and momentum  we observed earlier in the year," said Kevin James, Chief Solutions Officer at Equifax Australia. 

Shrinking Mortgage Enquiry Values Open Emerging Affordability Windows
The shift in market sentiment impacted mortgage enquiry values as strongly as application volumes. Between March and June 2026, the national average mortgage enquiry  amount contracted by $8,000 (-1.1%). Major eastern seaboard capitals led the decline, with Brisbane (-$15K), Sydney (-$12K), and Melbourne (-$11K) all experiencing double-digit contractions well above the national average. 

At a localised level, premium corridors saw six-figure reductions in average mortgage enquiry amounts. Sydney’s Canada Bay recorded the steepest fall nationwide (-$145K), while Melbourne’s Keilor (-$101K) and Queensland’s Maroochy (-$119K) also recorded significant drops. Perth was the only major capital market to maintain positive movement post-reform, while regional non-capital areas proved more insulated (-$4K) than major metropolitan areas.  

"While shrinking mortgage enquiry amounts likely reflect a broader market cooling, they also reveal emerging windows of opportunity for prospective buyers," James observed. 

Equifax observed that Perth and Adelaide currently offer the lowest mortgage value entry points, with Kwinana ($526K) and Gawler ($565K) leading the lower mortgage enquiry values. The data also showed sharp drops since March 2026 in areas such as Brisbane's Capalaba (-$79K) and Sydney's Wollondilly (-$71K). Suburbs such as Adelaide's Playford (+$15K) and Perth's Kwinana (+$8K) bucked the trend with increases, indicating that even in a tightening macroeconomic environment, growth can be seen in certain pockets. 

Proactive Hardship Management Reflects Household Adaptability
When it comes to household pressure, Equifax observed a rise in financial hardship accounts in Q2 2026. Mortgage hardship accounts rose +5.3% Quarter on Quarter, while non-mortgage hardship accounts increased by +5.6% QoQ.  

Personal loans registered the highest overall hardship rate at 1.10%, while auto loans recorded a 0.82% hardship rate. Victoria emerged as a national hotspot for financial stress, leading the country in both mortgage and total hardship rates at 0.78%. Credit cards, however, remained the most resilient credit product in the market, maintaining the lowest financial stress rate at just 0.14%. 

“The 5.6% rise in non-mortgage hardship accounts likely signals responsible, proactive management. Equifax data indicates Australian consumers may be seeking assistance earlier, which aligns with mostly stable or slightly improved late-stage arrears observed across key credit types in Q2.”

"We’ll continue closely observing these evolving credit dynamics. While current market factors have undeniably reshaped borrowing behaviour in the near term, historical data shows that market participants tend to adjust quickly as new baseline conditions settle, concluded Kevin James.”  

-Ends-

Chart 1: Average Demand Change by Credit Type Vs Previous Year 

 

Chart 2: Average Loan Amount change March 2026 vs Jun 2026 

Chart 3: Top 5 Average Mortgage Size Declines in Key Markets March 2026 vs June 2026

Chart 4: Lowest Average Mortgage Size in Key Markets March 2026 vs June 2026

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FOR MORE INFORMATION
Equifax Australia| [email protected]

NOTE TO EDITORS
Equifax Consumer Credit data measures the volume of credit card, personal loan applications, Buy Now Pay Later, mortgages and auto loan applications that go through the Equifax Consumer Credit Bureau by financial services credit providers in Australia. Credit applications represent an intention by consumers to acquire credit and in turn spend; therefore, the index is a lead indicator. This differs to other market measures published by the RBA which measure credit provided by financial institutions (i.e. balances outstanding). 

DISCLAIMER
Purpose of Equifax media releases:
The information in this release does not constitute legal, accounting or other professional financial advice. The information may change, and Equifax does not guarantee its currency or accuracy. To the extent permitted by law, Equifax specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.