Is Australia's Mortgage Market Finally Turning a Corner?
CBA sees mortgage credit stabilising as conditions improve
Australia's mortgage market may be showing early signs of stabilisation, with Commonwealth Bank of Australia (CBA) expecting mortgage credit growth to settle in a relatively narrow 4–5% range over the year.
The outlook comes as mortgage activity appears to have reached a low point, with CBA indicating that conditions began improving from late June and strengthened further into early August. While volatility is expected to continue, the bank believes the deterioration in mortgage activity has stopped and conditions could improve further later in FY27.
Mortgage activity appears to have bottomed
CBA CEO Matt Comyn said mortgage activity appeared to have bottomed around late June. By early August, activity had already strengthened slightly, suggesting the housing credit market may be moving past its recent period of weakness.
CBA now expects mortgage credit growth to remain within a relatively narrow 4–5% range over the year, although monthly movements could remain uneven.
The stabilisation could provide an important signal for Australia's housing market, particularly as borrowers and lenders adjust to changing interest rate and property market conditions.
Borrower behaviour remains important
CBA also highlighted that headline mortgage credit figures need to be considered alongside changes in offset balances and the way borrowers are repaying their loans.
These factors can influence the underlying picture of household borrowing and mean that headline credit growth does not necessarily provide the full picture of mortgage demand.
Nevertheless, CBA believes the deterioration in mortgage activity has stopped, with further improvement expected as FY27 progresses.
What investors should watch next
Investors will be watching mortgage lending data, housing prices, interest rates and borrower behaviour to determine whether the recent stabilisation develops into a broader recovery.
A sustained improvement in mortgage activity could provide support for the housing market and financial sector, while weaker-than-expected credit growth could signal continued pressure on housing demand.
For now, CBA's outlook suggests Australia's mortgage market may finally be turning a corner. With mortgage credit growth expected to remain around 4–5% and conditions showing early signs of improvement, the second half of FY27 could provide a clearer indication of whether the housing credit market has moved beyond its recent slowdown.
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