Value of Australian Investor Loans Falls 32.3% to A$24.7 Billion
Key Facts
Data released by the Australian Bureau of Statistics on November 11 showed the value of new investor loan commitments fell 32.3% in the September quarter to A$24.7 billion, a contraction that exceeded the decline in the housing loan market as a whole. The total value of new housing loan commitments fell 15.5% to A$81.2 billion during the quarter. Year on year, the value of investor loans declined 38.1%, while the total value of housing commitments fell 18.1%. The data measure new loan commitments, not outstanding debt balances. The measure excludes refinancing.
The decline in the number of new investor loans was slightly smaller than the fall in their value, but remained sharp: the number fell 30.6% quarter on quarter to 35,301 commitments. Compared with September 2025, the number declined 38.5%. The declines in both value and number mean the contraction covered the volume of activity and the number of loans, not just their total value. Across the market, new housing loan commitments include construction and purchases of new and existing homes. Refinancing is excluded from these figures, making them a measure of new housing-related borrowing activity.
The decline followed an earlier fall in the June quarter, when the total value of new housing loans dropped 5.2% and the value of investor loans fell 10.2%. The decline accelerated in the September quarter to 15.5% for the market as a whole and 32.3% for investors. In its Financial Stability Review, the Reserve Bank of Australia said new housing loan commitments were 27% below their peak recorded in November 2025. It added that the decline was sharper among investors and concentrated in loans to purchase existing homes. The RBA said this pattern was consistent with lower after-tax returns on investment in existing housing following tax changes related to negative gearing and capital gains tax.
Since February 2026, the Australian Prudential Regulation Authority’s prudential limits have applied to new loans with high debt-to-income ratios. The rules allow banking institutions to have no more than 20% of new mortgage lending in loans where the debt-to-income ratio is six times or more. The limits apply separately to owner-occupier and investor portfolios. The tax changes announced in the budget are still in the future: from July 1, 2027, negative gearing for residential property will be limited to new construction. Properties owned before the May 12, 2026 announcement are exempt from these changes.
On monetary policy, the Reserve Bank of Australia raised interest rates on November 3 for the fifth time in 2026, following four previous increases. The governor said the tightening was aimed at domestic capacity pressures, which emerged before oil prices rose. In its November report, the bank forecast headline and underlying inflation would remain above 3% through the end of 2027, before returning to the middle of the 2–3% range in mid-2028. It also reported that house prices in September were about 5% below their March peak, attributing the decline to higher interest rates and the tax changes announced in the budget. The Bureau of Statistics is due to release lending indicators for the December quarter on February 10, 2027.