The nation’s biggest mortgage lender, CBA, has released its annual results, and the investor presentation contains interesting information on home lending.
First, home loan applications have fallen significantly since the May federal budget, when the government changed negative gearing and capital gains tax.
CBA home loan applications are currently tracking 17% below the same time last year.
Source: CBA Investor Presentation
Second, the sharp decline in home loan applications reflects tighter borrowing capacity, which has been “impacted by higher interest rates and federal government tax reform changes”.
Source: CBA Investor Presentation
Third, while overall mortgage arrears remain low, they have begun to trend higher:
Source: CBA Investor Presentation
CBA notes that arrears are “increasing as cost-of-living and interest rate pressures affect some borrowers”.
Two sets of data released last week rang ‘warning bells’ on mortgage arrears, with Equifax saying the number of mortgage accounts in financial hardship had increased by 5.3% quarter-on-quarter, while Roy Morgan reported that just over one million mortgage holders were at “extreme risk” of stress over the six months to June 2026, higher than in the previous six months.
Source: Roy Morgan Research
Home values are now declining swiftly at the national level, particularly in Sydney and Melbourne, which will likely lead to an increase in mortgage arrears in the coming period.
However, the biggest risk isn’t interest rates nor falling home values; it is rising unemployment.
