Equifax data revealed a 2.3% rise in mortgage demand in Q3 2024 compared to Q3 2023, marking the first increase in three years.
This suggests buyers are preparing to enter the market, possibly anticipating future rate cuts.
“The increase in mortgage demand may indicate glimmers of consumer confidence returning,” said Moses Samaha (pictured above), executive general manager at Equifax.
“Many Australians are warming up to the idea that an interest rate cut is on the mid-term horizon, so the rise in mortgage applications suggests that buyers are starting to take action and get into the market early before the interest rate drops and demand accelerates further.”
While mortgage demand shows early signs of recovery, credit card growth has slowed to 4.8% year-over-year, reflecting more cautious spending.
“Many people are still tightening their belts,” Samaha said. “The slowdown in credit card applications suggests that the recent RBA policy has helped alter Australians’ consumption behaviour.
“Discretionary spending will likely remain subdued until after the first interest rate cut is announced and financial relief begins to flow through to consumers.”
Equifax’s data showed a 4.5% increase in the number of mortgage accounts in arrears and a 14.5% rise in arrears limits. Seasonal improvements were noted, but arrears still remain higher than last year.
Younger homeowners and those who took out mortgages in 2023-2024 are feeling the pressure more acutely, showing early signs of repayment difficulties.
Samaha warned of the challenges for these groups.
“Mortgages that originated in mid-2023 onwards are showing elevated signs of stress much earlier than mortgages that were on the books from before Q3 2023, indicating new borrowers have struggled more with repayments and cost-of-living pressures on their household budgets,” he said.
Victoria stands out as having a more challenging mortgage environment, with new mortgages there 20% more likely to be in arrears compared to the national average.
Samaha attributed this trend to the state’s heightened sensitivity to interest rate changes.
“Mortgage holders in Victoria are finding it particularly tough,” he said. “The higher rate of arrears in Victoria is demonstrative of the fact that the state is more susceptible to interest rate changes than other geographies.
“Moreover, we’ve found that those most impacted are younger Australians and owner-occupiers.”
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