Westpac says tax changes cut mortgage applications 20%

Westpac Banking Corp said Australia’s property tax changes drove a 20% fall in mortgage applications, a sharp sign that housing demand cooled almost as soon as the policy shifted. The lender also warned that investor housing credit growth could roughly halve, a move that would reach beyond its own balance sheet into the wider property market.

The bank’s update, published Monday, Aug. 10, came after chief economist Luci Ellis told clients in a Westpac IQ note on Aug. 7 to “buckle up for some short-term housing turbulence.” Another Westpac Economics note published the same day was titled “consumer resilience amid housing gloom,” reflecting the tension between softer housing activity and households that have not yet pulled back as hard in other parts of the economy.

Westpac said the 20% fall in mortgage applications was double the decline it had reported in the weeks after the government announced the tax changes, suggesting the slowdown accelerated as the policy took hold. The bank’s June 22 Housing Pulse had already flagged a “major tax shake-up,” and the latest numbers show that investors and would-be buyers have started to respond in measurable ways.

That matters because investor demand has been a major driver of housing activity in many large metropolitan markets, where prices have already been pressured by supply shortages, high construction costs and changing interest-rate expectations. If investors step back further, auctions could become less competitive and price growth could slow, especially in the segments that have relied most heavily on speculative buying.

The policy shift also lands in the middle of a broader debate in Canberra over how to cool speculation without squeezing first-home buyers or worsening the rental crunch. Westpac’s own markets materials said APRA’s June 2026 ADI statistics reflected lending activity after the rate hikes in February, March and May, as well as the immediate post-budget period in May, showing how taxes, rates and credit conditions have all been moving at once.

The implications extend well beyond housing headlines. Mortgage applications are one of the earliest signals for loan growth, fee income and construction demand, and a sustained drop can feed through to property services, building pipelines and consumer confidence. Westpac’s warning points to a faster-than-expected adjustment in investor sentiment, with the next few weeks likely to show whether the tax changes have produced an intended cooling or a broader drag on affordability and construction.