Australia’s mortgage market opened 2026 with solid growth in demand and improving arrears, suggesting borrowers are adapting to higher mortgage rates and living costs, according to Equifax’s Q1 2026 Consumer Market Pulse.
Secured consumer credit applications rose 4.9% year-on-year, led by a 7.5% jump in mortgage enquiries. Average limits on new home loans also increased, with borrowing amounts on new mortgage accounts up 6.7% compared with Q1 2025.
Amid rising petrol prices and cost-of-living pressures, Equifax links this to robust consumer behaviour in a tougher macro setting.
Kevin James (pictured), chief solution officer at Equifax, noted that “with global uncertainty, supply chain disruptions, higher consumer borrowing rates, and rising fuel prices, it is easy to suggest that we could expect to see a dramatic decrease in credit demand,” but recent data instead “demonstrates the resilience of Australia’s credit market, as long as factors such as unemployment remain low.”
Building on that theme, the major banks’ latest half‑year results show the big four delivered $15.2 billion in profit, down 2.1% on 1H25, and lifted expected credit loss provisions 3.6% as the cash rate reached 4.35%.
For mortgage brokers, a key shift is where the growth is coming from. Equifax reports that most of the additional demand is being driven by borrowers upgrading or refinancing, while new entrants to the housing market fell about 3.5% year-on-year. That pattern points to homeowners optimising existing debt rather than large numbers of first-home buyers entering at current price and rate levels.
James also highlights the historical link between lending flows and property values, saying “positive growth in mortgage demand could suggest the price cycle is yet to turn down,” consistent with earlier tightening phases where dwelling prices ultimately held close to their long-run growth trend.
Credit performance remained broadly stable in Q1. Equifax reports that mortgage arrears of 90 days or more edged lower, both by share of active accounts and by total limits, while credit card arrears also softened. The 90‑plus‑day delinquency rate on cards sat at 0.31%, with the dollar value of overdue balances down nearly 3% on a year earlier, helped by a marked improvement among 18–25‑year‑olds.
In contrast, stress is more visible on larger unsecured balances. Personal loan arrears rates improved slightly in volume terms, but the value of loans in 90‑plus‑day arrears rose 3.1% year-on-year.
“The softening of mortgage and credit card arrears in Q1 showcases Australians’ responsible financial reaction to economic headwinds,” James said.
At the same time, the personal loan trends signal pockets of pressure that brokers should factor into serviceability assessments.
For now, capital and liquidity metrics at the majors remain comfortably above regulatory minimums, reinforcing that lenders have room to support creditworthy borrowers even as growth slows and risks build.
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