Younger borrowers lead the retreat amid a double-whammy of higher interest rates, cost-of-living pressures
Australian mortgage demand fell 14% year-on-year in June 2026, with every state and territory recording a decline for the first time this year, according to the latest Equifax Consumer Credit Demand Data Trends report.
The data, which tracks credit application volumes across the country, shows the downturn was led overwhelmingly by younger borrowers. Demand from 26-35 year-olds fell 18.2%, while 18-25 year-olds recorded an 17.9% decline – a sharp contrast to the 56-plus age bracket, which posted a comparatively modest 5.6% fall.
First home buyer demand was hit even harder, dropping 17.2% nationally, with Queensland recording the steepest fall at 20.8% and Tasmania the most resilient at 9.9%. Refinancing wasn't spared either: switching to a different lender fell 15.1% and refinancing with an existing lender dropped 10.4%.
The figures mark a further cooling from the conditions detailed in an earlier report on RBA rate hikes slowing new mortgage demand, although they stand in contrast to the momentum seen in Gen Z mortgage activity under the 5% Deposit Scheme earlier in the year.
Why are younger borrowers pulling back hardest?
Kevin James (pictured), chief solution officer at Equifax, said the shift reflects a more defensive approach to borrowing brought on by a "double whammy" of cost-of-living pressure and a sustained high interest rate environment. He said households are prioritising liquidity over new debt commitments, and that the pullback is not confined to mortgages.
"We are also seeing a shift in day-to-day unsecured lending," James added, pointing to credit card demand, which saw its third straight monthly decline. It is a pattern Equifax says hasn't been observed since 2022.
Personal loan demand also turned negative for the first time in 18 months, down 1%, though Western Australia bucked the trend with 7.1% growth, albeit softer than the 11.4% recorded in May.
James attributed the generational divide directly to leverage. "This older cohort generally holds more unencumbered wealth and lower debt leverage, insulating them from the immediate friction of current cash rates," he said, noting demand from the 56-plus bracket grew in both auto loans and personal loans.
Western Australia stands apart
Every eastern state recorded double-digit falls in refinance switching, but Western Australia was the most resilient market across the board – down just 8.5% in mortgages, 0.7% in credit cards, and the only state to post growth in personal loans. By contrast, the ACT recorded the sharpest overall mortgage decline at 18.6%, followed by Victoria at 15.9% and NSW at 15%.
James described the pattern as "a real multi-speed economy," with New South Wales and Victoria leading the decline in refinance switching at 18.3% and 16.6% respectively, while WA's lower debt-servicing pressure appears to be cushioning demand.
The data points to a widening gap between generations in loan affordability and appetite. With younger cohorts pulling back across mortgages, first home buyer activity and unsecured credit alike, established homeowners in the 56-plus bracket appear to represent a comparatively stable client base for refinancing and equity-based lending in the months ahead.
