Home loan rates plunge as interest hikes and tax changes cause historic decline in Australian mortgage applications
Home loan rates in Australia have experienced the steepest quarterly decline ever recorded due to new tax changes and surging interest rates.
According to the Australian Bureau of Statistics, the total value of new home loans decreased by 15.5% during the September quarter, reaching $81.16 million with 111,878 new mortgages.
The market saw a significant exit from investors, with new investor loans plummeting 30.6% to 35,301 loans, while the loan value dropped 32.3% to $24.71 million.
Both the number and value of investor loans have decreased for the third consecutive quarter, marking the largest quarterly decline on record for both metrics.
Tax reforms
The decrease is attributed to a mix of federal budget tax changes from May and five interest rate hikes over the year.
The tax reforms included adjustments to negative gearing and capital gains tax (CGT) discounts.
The 50% discount under CGT has been abolished and replaced with indexation, while negative gearing is now limited to new constructions.
Current investors will have until July 1, 2027, before the changes come into effect for assets acquired after this date, requiring independent or tax authority valuation for tax purposes.
Meanwhile, the Reserve Bank of Australia has elevated the cash rate from 3.60% to 4.85%.
