Latest data from the Australian Bureau of Statistics revealed that as of February 2016, the national average home loan size is at $357,200 – 4.08 per cent lower from the previous month. analyzed these data and found out that the home loan size decline of 7.71 per cent in the past three months to February is the biggest three-month drop since 2000 when the national average declined to 7.74 per cent from May to July 2000.

The sharpest decline was in New South Wales, where the average home loan size dropped by 5.75 per cent. Among all the states, only South Australia experienced a hike in loan size at 0.62 per cent.

According to money expert Bessie Hassan, this is the result of tougher bank lending policies that were introduced in mid-2015.

"A cooling property market has led to shrinking maximum loan sizes following the Australian Prudential Regulatory Authority's changes to investment lending," Hassan said. "Banks are scrutinising new loan applications more closely, taking a tougher line when assessing borrower's income."

This is also one of the main reasons for the deceleration of the housing market. According to latest figures from CoreLogic, the rate of house price growth slows year-on-year, with median capital city prices in March rising just 0.2 per cent. Credit reporting bureau Veda also revealed that the demand for mortgages slowed significantly in the last quarter of 2015.

On the bright side, Hassan said that this could be a good time for buyers to take advantage of low interest rates and cooling property prices.

"The upshot of this is that the home loan market will be under pressure, and banks will be eager to secure new customers. This could lead to an increase in housing affordability with interest rates declining even further," she said.