Sydney, June 23, 2026, 03:09 AEST
- Westpac ended Monday at A$35.12, up 0.31%. The ASX 200 slipped 0.1%. The bank index added 0.51%.
- Westpac economists are forecasting a 20% drop in housing-market turnover from recent tax changes, and say national prices are set to fall 2% in 2026.
- Monthly mortgage applications are down to 27,000 since the budget, but more loans through Westpac’s own channels are helping to partly offset earnings.
Westpac Banking Corp (ASX:WBC) added 11 Australian cents to finish at A$35.12 on Monday. Shares outperformed the broader market, which was down, but the move lagged behind other banks as investors looked at steady credit quality and weak mortgage demand. Commonwealth Bank was up 0.62%. ANZ gained 0.63%, both about double Westpac’s percentage rise.
Westpac’s economics team sounded a stronger alarm on housing. Matthew Hassan, who leads Australian macro-forecasting at the bank, said, “We expect the changes to drive a steep fall in investor activity with wider market turnover declining 20%.” The team predicted a 2% fall in national prices, which would leave prices unchanged for the year 2026. Westpaciq
The research isn’t management guidance from Westpac. Still, timing is key. The bank has an unusual exposure to the difference between outstanding mortgage balances, which look backwards, and new mortgage applications at the front end of the lending pipeline.
Westpac saw monthly applications fall to an average of 30,000 in April and May, slipping from 33,000 in the previous quarter and 35,000 in the first quarter. The run rate after the budget was even weaker at 27,000, showing an 18% drop from the second-quarter average. Still, by the half-year, total home-loan balances were 7% higher at A$518 billion. That gap means the reported loan book could stay solid for some time, even as new demand slows.
Channel mix is the overlooked offset here. Westpac’s main brand saw the share of home loans coming through its own staff and systems jump to 38.2% from 34.8%. These customers hold on average 3.4 Westpac products each, against 2.9 for those sourced by brokers. Slimmer new mortgage flows could mean more value per customer if Westpac can keep more of those relationships direct.
Consumer net profit was up 9% in the first half, and mortgages with payments at least 90 days overdue made up 0.57% of the portfolio. Annualised mortgage losses came in at 0.9 basis point. One basis point equals 0.01 percentage point. The consumer net interest margin dropped four basis points to 1.74%. That margin, the gap between lending income and funding cost, is narrowing as competition pressures the bank, even before loan growth slows. Still, the portfolio isn’t showing signs of a credit shock yet.
Morgan Stanley is still underweight on Westpac, setting its price target at A$31.50. Shares finished Monday roughly 11% higher than that mark. The broker says Westpac’s retail side has improved, but sees downside from softer investor lending weighing on earnings. “Aside from COVID, we cannot recall a time in the past 25 years when the operating conditions for banks have shifted so quickly,” analyst Richard Wiles said. The Wall Street Journal
RBA kept the cash rate at 4.35% on June 16, after raising it 75 basis points earlier this year. Governor Michele Bullock said the hikes are “tough for households with mortgages,” but said they’re needed to slow demand and inflation. That leaves the door open for more tightening, putting heat on Westpac’s loan book from both new borrowing and stressed existing customers. Reserve Bank of Australia
The risks may play out quicker than any boost from the channel mix. If the 27,000-application run rate turns into settlements before Westpac has time to build stronger customer ties, balance growth could lag and margin pressure from pricing will stick around. A deeper drop in property values would cut refinancing and could raise arrears, even as current loss rates are still low.
Inflation, jobs, vacancy and household spending numbers out of Australia are up next for the market. Westpac is set to pay its fully franked A$0.77 interim dividend to shareholders on Friday, June 26. The payout means cash to holders but doesn’t count as new earnings. Investors will focus more on whether the next operations update shows proprietary lending holding up as the mortgage business loses steam.
