Five Months of Falling Demand: Why Refinance Switchers Win
Mortgage demand fell 14.1% in August for a fifth straight month, but borrowers who switched lenders to refinance dropped just 1.1% year on year.
Five Consecutive Months of Contraction
Australian mortgage demand fell 14.1% year on year in August 2026, according to Equifax data reported by Australian Broker. It marked a fifth consecutive month of year-on-year contraction, extending a decline that began in April.
The August result was an improvement on July's 16.4% fall, but Moses Samaha, executive general manager at Equifax Australia, said borrowing sentiment remains subdued. "We may well be at or near rock bottom in terms of this contraction cycle," Samaha said — though he was quick to add that another rate rise could push that floor even lower.
That caveat is well-timed. All four major banks are expecting the RBA to raise the cash rate at its 29 September 2026 board meeting, following three increases this year that have already taken the cash rate to 4.35%. A fourth hike to 4.60% would add further pressure to borrowers who are already managing higher repayments.
The declines were not uniform across states. New South Wales recorded the sharpest fall of any mainland state, with demand down 15.9% year on year. Western Australia posted the smallest decline at 10.4%.
First-Home Buyers Step Back — And Why That Makes Sense
First-home buyer applications fell 20% year on year in August 2026, according to Equifax. Samaha said recent policy changes designed to improve access for first home buyers "have yet to deliver the lift in first home buyer demand they were meant to create."
He pointed to the combined drag of falling property values and elevated interest rates, noting that "policy incentives alone aren't moving the needle." Samaha suggested younger Australians are taking a deliberate wait-and-see approach and does not expect their confidence to return until rate cuts come back into prospect.
Equifax's age breakdown makes the generational split plain: demand fell 21.7% among 18- to 25-year-olds and 18.1% among 26- to 35-year-olds, compared with just 1.7% among borrowers aged 66 and over.
That response is rational in the current environment. But sitting out entirely carries its own risk. If rates peak in the next six months and begin declining, those who have prepared — who understand their borrowing capacity, built a deposit, and done the groundwork — will be best placed to move quickly when the window opens. If you are in this cohort, now is the time to use the borrowing power calculator to understand what you can borrow at current rates, and to review first home buyer loan options so you already know the landscape before conditions shift.
The Refinancing Signal That Most Borrowers Are Missing
The most telling figure in the Equifax data is not the headline fall — it is the divergence inside the refinancing numbers.
Total refinancing demand fell 12% year on year in August. But the split between borrowers who stayed with their existing lender versus those who moved tells a very different story:
- Refinancing with an **existing lender** dropped 22.8% - Refinancing with a **different lender** fell just 1.1% — the smallest decline since that measure turned negative in April
That gap of more than 21 percentage points is significant. It signals that borrowers who are willing to take their loan to another institution are still finding a functional, competitive market. Lenders are continuing to pursue new-to-institution customers in a way they are simply not doing for existing customers who stay put.
The implication for anyone who last reviewed their home loan in 2024 or earlier is clear: the reward for shopping externally has not disappeared. Compare refinance options available today to see how your current rate stacks up, or use the refinance savings calculator to model what you could save annually by moving to a more competitive loan.
What to Do Before the Next Rate Decision
The RBA board meets on 29 September 2026. If the major banks are correct and a rate rise follows, repayments will increase further across the country. The Equifax data confirms borrowers are already feeling the weight — demand is down, younger buyers are hesitating, and refinancing overall has contracted.
But within that picture, one pattern holds steady: borrowers who move between lenders continue to find competitive offers. Those who have not taken that step are leaving money on the table.
Whether you are a homeowner on a variable rate, a first home buyer watching from the sidelines, or a property investor reviewing your loan structure through investor home loan options, acting before the next rate announcement gives you better options. Your serviceability position looks more favourable to a new lender before another rate rise arrives than it will after one.
Australian Broker reports the full Equifax August credit demand findings.