Yesterday, Westpac reported a 20% decline in average monthly mortgage applications since May, with investor housing credit growth forecast to slow from 9.1% in 2026 to 4.5% in 2027.

Read the full Reuters report: Westpac reports 20% drop in mortgage applications after Australia’s tax changes

It is a significant shift in residential lending and a useful signal of how borrowers are responding to changes in tax settings, higher borrowing costs and broader economic uncertainty.

But while commercial borrowers operate in the same broader economic environment, the commercial market doesn’t always move in lockstep with the residential market, as the policy settings and drivers are largely different.

What does this mean for commercial lending?

Rather than looking at residential mortgage volumes alone, it is important to watch the indicators closer to the commercial market:

• Are businesses continuing to invest?
• Are commercial property owners refinancing or accessing equity?
• Are funding costs changing the timing or structure of transactions?
• Where are borrowers encountering changes in bank appetite or policy?
• Which transactions are continuing to move in a more selective lending environment?

Together, these indicators give a clearer picture of what is happening in commercial lending than residential mortgage application volumes alone.