iscover 
Economic pressure, inflation, and successive rate hikes have continued to weigh on Australia’s credit market, with Equifax’s Consumer Market Pulse showing a 10.9 per cent year-on-year decline in overall mortgage demand in May 2026.
Refinancing activity has taken a hit during the same period, with Equifax data showing an 8.3 per cent year-on-year decline in inquiries related to switching to another lender and an 11.3 per cent decline in refinance inquiries for property upgrades.
New mortgage demand was also down during May, with first home buyer inquiries falling 13.4 per cent – the level measured during the same period in 2025.
Kevin James, chief solutions officer at Equifax, said the data indicates the “proactive risk management” observed by the agency earlier this year may have evolved into a “more conservative approach to new borrowing”.
“Consumer appetite for discretionary, big-ticket commitments has decelerated noticeably,” he said.
“Facing a cumulative ‘double whammy’ of persistent cost-of-living constraints and three successive interest rate hikes peaking in May, households appear to be responsibly choosing to preserve liquidity rather than stretch their borrowing capacities.”
James also commented on the decline in new mortgage lending, saying the resilient activity the agency had tracked over Christmas and early autumn had “hit a wall”.
“The cooling is particularly evident in Victoria and Queensland, with younger buyers in the 26–35 age cohort leading this decline,” he said.
“We’ve seen this demand surge in the past six months among First Home Buyers supported by the FHB 5 per cent Deposit scheme, but the current climate seems to have now really stalled that activity for now.”
Auto loans and personal lending
Demand for auto loans also fell during May, according to Equifax, taking an 11.9 per cent year-on-year hit.
Softening was recorded across all states and territories, according to Equifax, with Queensland seeing the most substantial decline at 14.69 per cent.
Equifax also said auto loan demand was weaker among younger consumers, with year-on-year declines recorded in the 26–35 cohort (down 14 per cent) and the 18–25 cohort (down 13.9 per cent).
Demand for personal loans was an exception, rising 0.37 per cent year on year, with the strongest growth coming from Western Australia (up 11.46 per cent).
Older borrowers accounted for the greatest uplift, with lending to those aged 56-plus increasing 11.52 per cent, while the 46–55 cohort also recorded growth of 5.13 per cent.
“Concurrently, our unsecured landscape highlights that younger age cohorts are scaling back auto loans and everyday credit lines, but more mature Australians are still tapping into credit,” James said.
Similarities with the past
Equifax’s latest data comes after a challenging period for the credit market, with persistent inflation, cost-of-living pressures, the prospect of changing regulation, and successive rate hikes likely weighing on borrower decisions and dampening overall credit demand.
However, James also said the data suggests the current cooling phase shares strong similarities with previous tightening cycles, such as the late 2023 rate peak, when similar macro-economic headwinds contributed to a broader pullback in borrowing activity.
“Back then, a sharp drop in mortgage demand lasted only a single month before finding its floor and rebounding quickly,” he said.
“The key differentiator we are observing today is a deeper level of consumer exhaustion; unlike previous cycles where credit cards had acted as temporary cash-flow safety tools, we are now seeing an across-the-board pullback.
“However, based on these historical patterns, we know the Australian credit market is highly resilient and we would not expect demand levels to remain depressed for an extended duration.”
[Related: Sydney and Melbourne to lead house price downturn, NAB forecasts]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.