Westpac Profit Rises Amid Slowing Mortgage Demand

Westpac, one of Australia's biggest banks, reported a slight increase in profit for the quarter ended June 30th. The bank's 'cash earnings' rose by 2% from its first-half average to A$1.8 billion, driven by loan and deposit growth and higher net interest income.

However, Westpac also noted that mortgage demand softened after May's federal budget changes, which included proposed limits on some tax breaks. The Reserve Bank of Australia kept rates high to cool inflation, further contributing to the decline in mortgage applications.

Westpac's own pipeline shows a significant drop in average monthly mortgage applications, from 32,000 to 26,000 between mid-May and July-end - a decrease of 20% compared to the quarter ended March 31st. This matters because mortgage applications typically turn into settled loans with a delay.

Westpac is already anticipating that housing credit growth will slow to 4.7% in 2027 from 6.8% in 2026, despite population growth and a housing shortage keeping some demand intact.