What happened
All four major Australian banks reported significant drops in new home loan applications following federal tax changes in the May budget. Australian house prices have jumped over 50% since COVID-19, leaving household debt at 114% of GDP—the second highest in the world—and prompting warnings that a three-decade housing super cycle is ending.
Why it matters here
Reduced mortgage originations signal tightening credit conditions across Australia's financial system. High leverage leaves households vulnerable to higher borrowing costs, while slowing transaction volumes could reduce property market liquidity, curb investor appetite, and dampen broad consumer spending across domestic retail sectors.
What to watch
Monitor upcoming APRA monthly credit growth data, major bank mortgage application updates, and core national dwelling price indices for signs of further market cooling.
Source
smh.com.au