First-home buyers are hitting the brakes on home loans as affordability continues to worsen.

The latest figures from the Australian Bureau of Statistics (ABS) showed a further decline in financing commitments from first-home buyers in July at 6.8%, a continuation of the 7.8% decrease recorded in the previous month.

Overall, financing commitments from first-home buyers has fallen by 20.5% since the beginning of the year.

On an annual basis, mortgage activity from first-home buyers was 20.4% stronger.

Real Estate Institute of Australia (REIA) president Adrian Kelly said the recent gains in house prices are contributing to the retreat in first-home buyers, which was apparent across all states and territories.

"The largest fall was seen in Victoria, followed by Queensland and New South Wales. It is likely these states will experience further falls as lockdowns continue to impact the market," Mr Kelly said.

Investors keep overall house lending afloat

The value of new housing loan commitments increased by 0.2%.

This was driven by the strong showing in the investor segment, which offset the 0.4% dip in the overall owner-occupier financing.

The value of new loans to investors went up by 1.8% in July, extending the 0.7% gain in the previous month.

This was the highest level of growth in new investor financing since the peak in April 2015.

"Investors re-entering the market is a very good thing for private rentals and overall confidence in the economy, but the end of stimulus programs for first-home buyers introduced with the onset of the COVID-19 pandemic is a strong factor in these figures," Mr Kelly said.

Refinancing gains traction

Meanwhile, overall refinancing activity remained strong.

The value of refinancing transactions jumped 60% in July.

The uptrend in refinancing was driven by mortgage holders seeking lower interest rates.

Your Mortgage home loan specialist Raj Ladher said the conditions are favourable to refinancers, as some rates are already beginning with a one.

"We have managed to save our clients thousands off their home loan interest," he said.