Investor lending hits record high as property punters splurge

The number of new loans written to property investors - considered a proxy for purchases - reached a high of more than 57,600 between July and September, according to new data. 

"Both the number and the value of new investment loans reached record highs in September .. with investment loans reaching around 40% of the total of new loans," said Mish Tan, Australian Bureau of Statistics' (ABS) head of finance statistics.

The value of new investment property loan commitments lifted nearly 18% to an average of around $685,000 in the September quarter - a nearly $16,000 jump, according to the quarterly ABS lending indicators release.

It comes after a recent PropTrack report noted future rate cuts would likely encourage even more property investors to purchase.

The 14% quarter-on-quarter increase in the number of new investor loans saw property investor purchases overtaking that of either established owner-occupiers or first home buyers individually.

Around 55,000 new loans were written to non-first home buyer owner-occupiers during that period while first home buyers took out close to 30,000 new mortgages.

Category	Number of new loans	Total value of new loans	Average value of new loans
First home buyers	29,637	$16.5 billion	$560,249
Owner-occupiers (inc FHBs)	83,846	$58.2 billion	$693,801
Investor	57,624	$39.8 billion	$685,634

_{Source: ABS lending indicators, September quarter 2025}

"Falling borrowing costs and low vacancy rates are favourable conditions for investors," Dr Tan said.

"Strength of lending for investment also pushed the total value of all new dwelling loans to a record high in September ($98 billion)."

Investor borrowing activity increased most in the ACT last quarter, with the number of new investment loans rising 4.9% in the state.

NSW also saw a 4.9% lift in new investor lending, while Victoria realised a 2.4% jump.

This coincides with credit growth for investment housing rising to decade highs.

Investors scramble as first home buyers struggle?

In a potentially worrying sign for wishful homeowners and buyers, the significant jump in lending and mortgage values realised among investors wasn't reflected among first home buyers and owner-occupiers.

Owner-occupiers as a whole, inclusive of first home buyers, took out 2% more loans in the September quarter than the prior period, with mortgage values rising 4.7%.

Lending to first home buyers, on the other hand, increased 2.3% quarter-on-quarter, with mortgage values lifting just 1.1% - a figure that's not in line with house price growth.

Australia's median dwelling value rose 2.2% over the three months to September, Cotality data shows, followed by a 1.1% rise in October.

"The upper quartile of the market is showing the lowest rate of growth across almost every capital city," Cotality research director Tim Lawless said in late October.

"Stronger housing demand at the lower price points is likely a culmination of serviceability constraints eroding purchasing power, persistently higher than average levels of investor activity, and what is likely a pickup in first home buyers taking advantage of the expanded deposit guarantee."

The ABS' read of the home loan market for the December quarter - to be released in February 2026 - will encompass the beginning of the 5% Deposit Scheme's expansion.

The scheme, formerly known as the Home Guarantee Scheme, allows eligible first home buyers to purchase with a deposit of 5% to 20% without paying for lenders mortgage insurance (LMI).

Regulatory intervention imminent?

News of roaring investor lending might leave some market watchers nervous or excited, depending on which side of the fence they sit.

The banking watchdog, the Australian Prudential Regulation Authority (APRA), recently warned it might redeploy strings limiting the growth of investor lending in order to protect the banking system.

Previously, the watchdog has reacted to an increase in risky lending partly driven by a strong jobs market and roaring house prices by putting the brakes on property investment loans.

In July, APRA warned that, if interest rates were to fall further without an increase in the unemployment rate, it could be forced to act once again.

"High household debt is a key vulnerability in our financial system, which has more exposure to residential mortgages than any comparable country," APRA chair John Lonsdale said in July.

"Although lending standards are currently sound, it's important to be forward-looking and prepared for potential risks at future points in the financial cycle."

He noted the watchdog will begin reaching out to banking entities to make sure they're ready to implement "aspects of different macroprudential tools" to reduce risks.

Such tools were said to include limits on high debt-to-income lending, as well as new investor or interest-only home loans.

However, it's worth noting that certainty surrounding future rate cuts has wobbled significantly in recent weeks.

Many economists are now forecasting just one more rate cut in the current cycle, while those at CommBank are going as far to say they expect the cash rate has bottomed out for now.

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_{Image by Martin David on Unsplash}