Equifax Inc.

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Bullish +68

Mortgage demand climbs as arrears ease in Q1: Equifax

📈 Secured consumer credit applications rose 4.9% year-on-year, with mortgage enquiries jumping 7.5%.

🏠 Borrowing amounts on new home loans increased by 6.7% compared to the same period last year.

💰 The four major banks reported $15.2 billion in profit for half-year 2026, down 2.1% from the previous period.

🤝 Mortgage growth is primarily driven by upgraders and refinancers, while first-home buyer activity fell 3.5%.

❤️ Mortgages of 90 days or more arrears decreased slightly in both account share and total limits.

💳 Credit card delinquency rates stood at 0.31%, with overdue balances down nearly 3% year-on-year.

🚫 Conversely, personal loan arrears saw a 3.1% year-on-year rise in the dollar value of overdue balances.

💬 Equifax's Kevin James credited strong credit market resilience to low unemployment despite global uncertainties.

⚖️ Capital and liquidity metrics for major banks remain comfortably above regulatory minimums.

📉 RBA is expected to pause rate hikes until August or September following current trends.

🤖 ASIC has issued warnings regarding accelerating AI-driven mortgage fraud.

🌍 Ongoing conflict in the Middle East continues to place pressure on Australian and New Zealand businesses.

🏚️ Some reports suggest a housing downturn may now be underway.

🛠 Western Australia's budget introduced major stamp duty overhauls aimed at first-home buyers.

Bullish Signals
  • Secured consumer credit applications rose 4.9% year-on-year, with mortgage enquiries jumping 7.5%, indicating strong demand despite higher rates.
  • Average limits on new home loans increased 6.7% compared with Q1 2025, suggesting borrowers are willing to access more credit for purchasing or upgrading homes.
  • Equifax's data demonstrates the resilience of Australia's credit market as long as unemployment remains low, even amidst global uncertainty and rising fuel prices.
  • Major banks delivered $15.2 billion in profit, reinforcing that lenders have strong capital and liquidity metrics well above regulatory minimums to support creditworthy borrowers.
  • Mortgage arrears of 90 days or more edged lower both by share of active accounts and total limits, signaling improving payment behavior among borrowers.
  • Credit card delinquency rates softened, with the 90-plus-day rate sitting at 0.31% and overdue balances down nearly 3% year-on-year.
  • A marked improvement in arrears among 18–25-year-olds on credit cards highlights positive financial adjustments among younger demographics.
  • The RBA pause on rate hikes is expected until August and September, which could stabilize the lending environment for mortgages and refinancing.
  • WA Budget delivers a major stamp duty overhaul for first-home buyers, potentially boosting new entrant activity in the property market soon.
Risk Factors
  • Major banks' profits declined 2.1% year-on-year to $15.2 billion, and expected credit loss provisions were lifted by 3.6%, indicating deteriorating asset quality or higher provisioning needs despite stable capital metrics.
  • New entrants to the housing market fell 3.5% year-on-year, signaling a significant contraction in first-home buyer activity which could suppress long-term property price growth.
  • While mortgage and credit card arrears softened, stress remains concentrated on larger unsecured balances, with the value of personal loans in 90+ days arrears rising 3.1% compared to a year earlier.
  • The resilience of credit demand is explicitly conditional on unemployment remaining low, creating a clear downside risk if the labor market deteriorates amidst global uncertainty and supply chain disruptions.
Full Analysis
Equifax's Q1 2026 Consumer Market Pulse report indicates that Australia's mortgage market experienced solid growth in demand with a notable easing in arrears, suggesting borrowers are adapting to higher interest rates and elevated living costs. Secured consumer credit applications rose 4.9% year-on-year, driven primarily by a 7.5% increase in mortgage enquiries, while average borrowing limits on new home loans jumped 6.7%. Kevin James, chief solution officer at Equifax, highlighted this resilience despite macroeconomic headwinds such as higher fuel prices and supply chain disruptions, noting that robust consumer behavior persists as long as unemployment remains low. The surge in activity is largely fueled by existing homeowners upgrading or refinancing their properties rather than first-home buyers entering the market; new entrant numbers fell approximately 3.5% year-on-year. This shift points to a focus on optimizing existing debt portfolios amid current price and rate levels. While mortgage and credit card arrears softened, with 90-day-plus delinquency rates on cards sitting at 0.31%, stress remains visible in larger unsecured balances where personal loan arrears values rose 3.1%. James noted that this contrast underscores a responsible financial reaction to economic pressures among mortgages and credit cards, though brokers must account for these pockets of pressure in serviceability assessments. The report also contextualizes the credit market environment with major banks reporting $15.2 billion in profit for the half-year, down 2.1% from the previous period, as they lifted credit loss provisions amid a cash rate of 4.35%. Capital and liquidity metrics at these institutions remain comfortably above regulatory minimums, providing lenders with room to support creditworthy borrowers even as growth slows. Equifax's analysis suggests that positive mortgage demand growth could indicate that the property price cycle has not yet turned downward, aligning with historical trends where prices held close to long-run growth trends during tightening phases.