New mortgage loans fell by a record 15% in Australia's September quarter, with investor lending plummeting 30.6%, according to Reserve Bank figures released Wednesday. Over the past year, overall new loans dropped 21.4%, while investor loans fell 38.5%.
The Reserve Bank's five interest rate hikes and stagnant real wages reduced housing demand across investors, first-home buyers and established homeowners. Tax reforms for investors also contributed to the decline in investor demand for existing homes.
First-home buyers saw a more moderate 8.6% drop in lending during the quarter and a 12.3% annual decline. This shift means the share of lending to first-home buyers has increased by nearly 9%, with average loan sizes rising almost 10%.
The value of new investor loans remains 1.5 times larger than new loans to first-home buyers. However, reduced investor competition may create opportunities for first-home buyers entering the market or purchasing better quality properties as prices fall.
Major bank lending fell 7.1% over the year, while non-bank lenders like La Trobe Financial and Athena Home Loans saw lending jump 67.7%, though from a low base. This shift reflects tighter serviceability rules that apply only to approved deposit-taking institutions, pushing more borrowers toward non-bank options.
Declining house prices and construction slowdowns will likely reduce demand for materials, tradespeople and real estate professionals, impacting jobs and broader economic activity. Households spending more on mortgages also have less to spend on dining, travel and consumer goods.