Westpac expects investor lending to nearly halve as federal budget bites
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The news: Westpac has seen a 20% fall in mortgage applications in a single quarter following the federal budget, which proposed changes to negative gearing and the capital gains tax discount.
An update on Thursday showed the 33,000 applications it had received in the second quarter had fallen to a run rate of 27,000 following the 12 May budget.
It now forecasts total housing credit growth to slow from 6.5% in FY26 to 4.7% in FY27. The decline is expected to be largely driven by investor lending, with the bank expecting it to drop from 8.4% this financial year to 4.4% for the next two years.
Westpac data also indicated consumer spending had slowed around 15% excluding fuel since the Iran conflict broke out.
The update was provided ahead of an analyst briefing on Thursday morning, where Westpac’s head of retail bank Carolyn McCann and data, digital and AI general manager Luis Uguina will run through the bank’s consumer strategy.
Their presentation shines a light on chief executive Anthony Miller’s strategy of getting its 10 million customers to do more with the bank, rather than acquiring new ones, to increase returns.
To do so, the bank is emphasising personalisation of customer experiences, strengthening its brand, winning a greater share of migrant customers and simplifying the bank’s suite of products and backend systems.
The context: The softness in the lending business is broadly in line with analyst expectations, which put total credit growth to drop by 25%.
On Wednesday, ANZ chief executive Nuno Matos said the budget would achieve its aim of pushing investors out of the market, cutting mortgage growth at the big banks by around a third.
It comes as all of the big banks tell brokers not to count on negative gearing concessions going forward.
The source: ASX
