Refinancing activity also starting to slow as borrowers hedge their bets
A rate rise from the Reserve Bank of Australia (RBA) today would further dampen appetite for new home loans, with fresh data from Equifax pointing to a clear loss of momentum among would-be borrowers.
Equifax executive general manager Moses Samaha (pictured) said sustained higher interest rates were now acting as a “handbrake” on new mortgage demand, as Australians increasingly prioritise managing existing debts over taking on new ones.
Equifax figures show new market entrants are already pulling back. New mortgage demand slowed sharply from a robust 10.9% year-on-year rise in the fourth quarter of 2025 to just 3.6% in the first quarter of 2026.
Month-by-month data underscores the trend: Growth dropped from 7.1% year on year in January to 3.9% in February, before stalling at -0.2% in March.
“In this period of intense economic headwinds, Australians are focusing on managing existing debt rather than taking on new obligations,” Samaha said.
Victoria is leading the downturn. The state finished 2025 in positive territory at 5.1% year-on-year growth in new mortgage demand in the fourth quarter, but the tide turned quickly in 2026. Activity eased to 2% in January, fell to -3.2% in February and slumped to -7.9% in March.
“If the RBA proceeds with another hike to combat the 4.6% inflation rate, we could see this cooling effect broaden across other states,” Samaha said.
Refinancing carries the market – but is cooling fast
While new mortgage demand wanes, refinancing remains the market’s engine room – albeit one that is losing revs.
Demand from borrowers refinancing with their existing lender was still 7.8% higher year-on-year in March 2026, but that compares to a 16.2% jump in January and 15.6% in February, signalling a notable slowdown.
Since late 2025, Equifax has observed stronger growth in borrowers staying with their current lender rather than switching, with Queensland a standout. Refinancing with an existing lender in that state surged 26.9% year on year in March alone.
“Refinancing hedge-betting has become a bit of a norm,” Samaha said, noting many established homeowners are locking in deals ahead of RBA decisions. “For many Australians, the work to de-risk their largest household expense is being done by the time the RBA meets.”
