Australian Home Loans Plunge 15.5 Percent in Record Quarterly Collapse
(MENAFN) Australia’s home lending market suffered its steepest quarterly contraction on record in the third quarter of 2026, as the country’s fastest housing downturn in four decades deepened, official figures showed Wednesday.
The national statistics agency reported that new home loan commitments dropped 15.0 percent from the previous quarter, while their total value sank 15.5 percent to 81.2 billion Australian dollars (55.9 billion U.S. dollars). It was the largest quarterly drop in lending value since the series began in 2002.
Investors drove the slump. The number of new investor loans collapsed 30.6 percent and their value fell 32.3 percent. Loans to owner-occupiers fell 5.3 percent by number.
“While lending activity fell across all borrower types in the September quarter, the decline was sharpest for investors. Our data suggests that investor activity is being influenced by factors beyond increasing borrowing costs, including the potential impacts of tax changes and expectations of lower house prices,” Mish Tan, head of finance statistics at the agency, said.
The lending data follows a bleak reading from property data firm Cotality earlier this month. The national median house price slipped 1.2 percent in October, its seventh straight monthly decline. Prices now sit 6.7 percent below their March peak, erasing 63,400 AUD (43,650 USD) from the value of the median dwelling. Cotality said no downturn in the past 40 years has moved faster.
Cotality research director Tim Lawless blamed a combination of pressures: interest rate increases, stubbornly weak confidence, rising living costs and the federal government’s decision to scale back tax concessions for property investors.
Borrowers also face higher repayments. On Nov. 3, Australia’s central bank lifted its key rate by 0.25 percentage points, the fifth increase of 2026, taking it to an 18-year high of 4.85 percent. It pointed to elevated inflation fueled by the conflict in the Middle East. The four largest consumer banks have all since passed the increase on to customers with variable rate mortgages.
Signs of strain are emerging in loan books. Commonwealth Bank, the country’s biggest lender, said in a trading update Wednesday that the share of home loans more than 90 days behind on payments rose seven basis points to 0.80 percent.
The bank still posted an unaudited third-quarter cash profit of 2.8 billion AUD (1.9 billion USD), up 8 percent from a year earlier, even as new home loan applications fell 16 percent.
CEO Matt Comyn said in the update that higher inflation and interest rates are weighing unevenly on household incomes and business activity. He added that the economy remains resilient, underpinned by low unemployment and strong public infrastructure and private investment pipelines.
The central bank’s Monetary Policy Board has one more meeting scheduled for 2026, in early December, to consider further changes to interest rates.
The national statistics agency reported that new home loan commitments dropped 15.0 percent from the previous quarter, while their total value sank 15.5 percent to 81.2 billion Australian dollars (55.9 billion U.S. dollars). It was the largest quarterly drop in lending value since the series began in 2002.
Investors drove the slump. The number of new investor loans collapsed 30.6 percent and their value fell 32.3 percent. Loans to owner-occupiers fell 5.3 percent by number.
“While lending activity fell across all borrower types in the September quarter, the decline was sharpest for investors. Our data suggests that investor activity is being influenced by factors beyond increasing borrowing costs, including the potential impacts of tax changes and expectations of lower house prices,” Mish Tan, head of finance statistics at the agency, said.
The lending data follows a bleak reading from property data firm Cotality earlier this month. The national median house price slipped 1.2 percent in October, its seventh straight monthly decline. Prices now sit 6.7 percent below their March peak, erasing 63,400 AUD (43,650 USD) from the value of the median dwelling. Cotality said no downturn in the past 40 years has moved faster.
Cotality research director Tim Lawless blamed a combination of pressures: interest rate increases, stubbornly weak confidence, rising living costs and the federal government’s decision to scale back tax concessions for property investors.
Borrowers also face higher repayments. On Nov. 3, Australia’s central bank lifted its key rate by 0.25 percentage points, the fifth increase of 2026, taking it to an 18-year high of 4.85 percent. It pointed to elevated inflation fueled by the conflict in the Middle East. The four largest consumer banks have all since passed the increase on to customers with variable rate mortgages.
Signs of strain are emerging in loan books. Commonwealth Bank, the country’s biggest lender, said in a trading update Wednesday that the share of home loans more than 90 days behind on payments rose seven basis points to 0.80 percent.
The bank still posted an unaudited third-quarter cash profit of 2.8 billion AUD (1.9 billion USD), up 8 percent from a year earlier, even as new home loan applications fell 16 percent.
CEO Matt Comyn said in the update that higher inflation and interest rates are weighing unevenly on household incomes and business activity. He added that the economy remains resilient, underpinned by low unemployment and strong public infrastructure and private investment pipelines.
The central bank’s Monetary Policy Board has one more meeting scheduled for 2026, in early December, to consider further changes to interest rates.
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