Mortgage demand sinks for 1st time since 2019

As per Equifax’s latest Quarterly Consumer Credit Demand Index, mortgage demand in Australia is declining, falling by 4.6 per cent between the March 2021 and March 2022 quarters. 

The analytics outfit has stated this is the first instance that mortgage demand in the country has fallen in two and a half years.  

This decrease was felt nationally, but was most apparent in Tasmania, which plummeted well above the national average at 11.5 per cent. 

Victoria (8.5 per cent), NSW (7.6 per cent), Western Australia (5 per cent), South Australia (4.8 per cent) and Northern Territory (4.6 per cent) also reported significant shifts downwards over the 12-month period. 

Speaking of the results, Equifax general manager advisory and solutions Kevin James speculated that the predicted lifts in interest rates could be one catalyst for this reduction.  

“The decline in mortgage demand suggests that factors such as interest rate rises and uncertainty around what impact this will have on the housing market has started to have a tangible impact on consumer behaviour, both for prospective new home buyers and existing mortgage holders,” Mr James said.

“We anticipate demand to slow further as additional interest rate increases are expected in coming months.”

However, the data also noted that this loss wasn’t shared at the same intensity, with the ACT (1.3 per cent) and Queensland (0.7 per cent) reporting declines much lower than the national average. A trend that Mr James suggested could be the result of relocation. 

“[Queensland’s figure] could be indicative of recent migration to the state by people from cities like Sydney and Melbourne, who were able to negotiate greater work/life flexibility during the pandemic,” Mr James said. 

This latest index compounded on recent data that also suggested fewer Australians are seeking mortgages. According to the NSW Land Registry Services, total mortgage volumes registered against residential titles in the state faltered by 1.8 per cent during the year to March 2022. 

It also comes in the wake of significant hikes in the value of a residential property in Australia. 

Earlier this month, a report by both ANZ and CoreLogic concluded that the average time needed for a home deposit of 20 per cent was more than 11 years – the figure ballooning to over 14 years if the property was based in Sydney. 

According to Domain’s March quarterly House Price Report, the average price for a house in a capital city is just short of $1.07 million. 

[Related: Time taken to save a deposit hits record 11.4 years]