What happened
Shares in Westpac fell 4.6% to $36.19 following its third-quarter trading update, dragging the broader ASX financials index down 2.4%. The bank reported that average monthly mortgage application volumes dropped 11% quarter-on-quarter and 20% below its post-budget run rate. The sharp selloff in Westpac outweighed gains across mining, healthcare, and technology stocks on the ASX 200.
Why it matters here
Mortgage growth has long been the primary driver of profitability for Australia's major retail banks. Westpac's declining loan application figures confirm that successive interest rate hikes and reduced buyer borrowing capacity are curtailing housing credit demand. Investors holding major bank shares should prepare for potential margin compression and slower asset growth across the banking sector.
What to watch
Monitor upcoming quarterly trading updates from ANZ, NAB, and regional lenders to see if mortgage volume declines are widespread across Australian banking.
Source
marketindex.com.au