Australia's financial sector weighed on the broader market after Westpac Banking Corp. reported a 20 percent slide in home loan applications since the budget, pushing its shares down nearly 6 percent. The ASX 200 closed down 0.3 percent at 9,232 points.
The mortgage weakness extended across the sector. Other major banks fell around 2 percent. National Australia Bank reported a 15 percent drop in mortgage volumes during the second quarter, reinforcing the sector-wide pressure.
Three RBA rate hikes this year have driven up borrowing costs and curbed demand for new home loans. Changes to negative gearing and capital gains tax, implemented in May, have further weighed on the housing market by altering the investment case for property owners and prospective buyers.
Some sellers are now holding back from listing, hoping to secure higher prices later as property price declines steepen across the country.
Healthcare stocks provided a partial offset. ResMed gained 4.3 percent after receiving broker upgrades from Macquarie and Morgan Stanley following its results presentation.
Gold producers also advanced. Newmont rose 4.6 percent, while BHP gained 0.9 percent and Rio Tinto added 0.8 percent.
Among individual movers, CAR Group jumped 9.9 percent on strong results and guidance. Arena REIT No. 1 fell 22 percent after management delayed the release of full-year results.
The RBA's interest rate decision, scheduled for 2:30 p.m. AEST, loomed as the session's central event given the persistent slowdown in housing and its implications for bank profitability.
Earnings reports are due this week from Commonwealth Bank of Australia, Telstra, Southern Cross Media, Amotiv, SGH and Helia Group.
S&P 500 futures pointed to a 0.1 percent gain, which would put the index on course for a record close.
