Investor lending records largest dollar-term decline since 2015 as market momentum slows
The value of new mortgage commitments fell by $5.4 billion in the June quarter, according to the latest lending indicators data released by the Australian Bureau of Statistics, as successive interest rate rises and the federal government's property tax announcement weighed on buyer activity.
Total new housing loan settlements reached $97.6 billion in the quarter, a 5% decline in seasonally adjusted terms from the March quarter. It marked the second consecutive quarterly drop — the first back-to-back fall in over three years.
Investors drove the retreat, with the value of new investor loans declining $4.2 billion, or 10%, from the previous quarter — the steepest drop in dollar terms since 2015. Owner-occupier lending fell by a more modest $1.2 billion, or 2%. Despite the quarterly declines, both segments remained above their June 2026 quarter levels a year earlier.
"The housing market has hit the brakes, with a $5.4 billion drop in new lending compared to the previous quarter," said Sally Tindall (pictured right), data insights director at Canstar.com.au. "Investors led the retreat, with the value of these loans dropping $4.2 billion or 10%, after three interest rate hikes and the federal government's property tax changes have taken plenty of shine off the property market."
The ABS figures align with application data reported separately by Australia's major lenders. CBA reported a 15% fall in new residential mortgage applications since 12 May. Westpac recorded an average 20% drop in applications between 15 May and 31 July compared to the prior quarter. NAB reported a 15% decline in home lending applications in the June quarter versus the March quarter.
Average loan sizes ease in some states
The national average new owner-occupier loan size fell for the second consecutive quarter, declining $4,000, or 1%, to $731,000.
NSW retained the highest average new owner-occupier loan size nationally at $842,000, despite a $19,000 quarterly fall. Victoria's average edged down to $664,000, with Tasmania and the ACT also recording declines. Queensland, South Australia, Western Australia, and the Northern Territory all reached record-high average loan sizes during the quarter. All state averages remained well above their year-earlier levels.
| Loan size | Quarterly change | Annual change | |
|---|---|---|---|
| Australia | $731,000 | -$4,000 -1% |
+$53,000 +8% |
| NSW | $842,000 | -$19,000 -2% |
+$27,000 +3% |
| Vic | $664,000 | -$11,000 -2% |
+$25,000 +4% |
| Qld | $751,000 ● record high | +$10,000 +1% |
+$88,000 +13% |
| SA | $672,000 ● record high | +$7,000 +1% |
+$74,000 +12% |
| WA | $720,000 ● record high | +$17,000 +2% |
+$100,000 +16% |
| Tas | $516,000 | -$5,000 -1% |
+$33,000 +7% |
| NT | $545,000 ● record high | +$7,000 +1% |
+$61,000 +13% |
| ACT | $666,000 | -$1,000 -0.1% |
+$31,000 +5% |
| Source: ABS Lending Indicators June 2026, prepared by Canstar.com.au. Based on seasonally adjusted figures. Data is in original terms and rounded to the nearest $1,000. | |||
"Buyers across the country are feeling the pressure from both higher borrowing costs and reduced budgets, with many opting to sit on the sidelines to see where the chips land and at what price," Tindall said.
"The fall in the average new loan size in NSW is little surprise as maxed out buyers hit their limits in terms of borrowing capacity. The downturn in buyer sentiment is also likely to be playing a part, with less competition in near-empty auction rooms pushing prices down rather than up.
"In Victoria and the ACT, similar trends are occurring as the drop in new owner-occupier loan sizes mirror the falls in property prices. While Queensland, Western Australia and South Australia are still at record highs in terms of their average new owner-occupier loan sizes, we could well see drops through to the end of the year, with prices now starting to wobble in these states' capital cities."
First-home buyer activity normalises
First-home buyer lending eased for the second consecutive quarter following a surge in the December quarter after the uncapping of the Home Guarantee Scheme. The number of new first-home buyer loans fell 3% in seasonally adjusted terms — a decline of 891 loans — returning activity to broadly the same level recorded a year ago. The annual value of new first-home buyer loans was effectively flat, up 0.05%.
Victoria recorded the highest volume of new first-home buyer loans at 9,407, despite a modest quarterly decline. The Northern Territory and South Australia posted the strongest quarterly gains, up 28% and 20% respectively.
Refinancing eases from record high
The total value of refinanced loans fell 2% in the June quarter to $67.1 billion in seasonally adjusted terms, pulling back from a record high set in the March quarter. The result nonetheless represented the third-highest level on record.
"The value of refinanced loans clocked in at the third highest level in the ABS records as borrowers seek out relief from rising rates," Tindall said. "It comes as the mortgage wars between banks ramp up, with lenders looking to existing borrowers to make up for the shortfall in new loan applications coming through.
"This competition is worth taking advantage of. Anyone taking out a new mortgage or refinancing should be shopping around, because even a relatively small drop in interest rates can make a meaningful dent in repayments, particularly for those lugging around a giant wad of debt."
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