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Housing Slowdown: Tax Changes Hit Mortgage Demand
13 Aug
Summary
- ANZ noted a slowdown in mortgage demand following Australian tax changes.
- Excluding a government scheme, mortgage applications fell 5% and 12%.
- Major rivals also reported significant drops in mortgage applications.
ANZ Group has indicated a slowdown in mortgage demand, directly linking the trend to recent tax changes implemented in Australia. This observation aligns with similar signals from other major Australian banks regarding a softening housing market. Although ANZ's overall quarterly cash profit rose to A$1.90 billion, largely due to increased lending volumes and improved margins, the underlying mortgage application values, when adjusted for a government support scheme, showed a notable decline.
Excluding the government's low-deposit home buyer scheme, ANZ's mortgage application values decreased by 5% compared to the second quarter. Furthermore, a comparison from the federal budget announcement to the end of July revealed a 12% reduction in these values, underscoring weaker housing demand. This downturn follows the government's decision to remove tax concessions for property investors, a move that has impacted buyer interest in a market vital for the earnings of major lenders.
Other prominent financial institutions have also reported a downturn. Commonwealth Bank of Australia noted a 15% decrease in mortgage applications after the tax changes in May. Westpac, the third-largest bank, experienced a 20% fall in applications and anticipates that investor housing credit growth could halve in the upcoming year. These trends highlight a significant shift in Australia's housing finance landscape.
