Investors wrote a record-breaking $72 billion in new investment loans during the September quarter, according to data released this week by the Australian Prudential Regulation Authority (APRA).
The figures show investment lending grew by almost $8 billion from the previous quarter, a 12% increase, according to analysis by Canstar. Owner-occupier loans grew more modestly by $646 million, or 0.5%, though this also reached a record high of $119.6 billion.
The surge marks the second consecutive quarter of rapid investor growth. In the June quarter, new investment lending jumped by 23%.
The APRA has already responded to the investor lending surge. Last month, the regulator announced new debt-to-income caps to curb risky lending, particularly by investors.
Under the new rules beginning in February, APRA will limit banks to approving up to 20% of new mortgages to borrowers with a debt-to-income ratio of six times or more.
The latest figures show the proportion of loans with risky debt-to-income ratios rose from 5.5% in the previous quarter to 6.1% in September, though still well below the new cap.
Home loan offset accounts grew by $25.4 billion in the three months to September, pushing balances to a record high of $327.3 billion. This represents 13.5% of all credit outstanding, the highest proportion since APRA’s dataset began in March 2019.
The growth was likely fuelled by tax returns and rate cuts, according to the analysis.
The value of home loans in arrears by 30 to 89 days dropped to 0.47% of all credit outstanding in the September quarter, down from 0.55% in the previous quarter. Non-performing mortgages, those overdue by 90 days or more or impaired, also fell to 1.04% from 1.07%.
“Over the last two quarters of data, investor lending has grown at break-neck pace – a surge that’s already caught the regulator’s attention,” said Sally Tindall, Canstar data insights director. “With new debt-to-income caps landing in February, APRA is clearly preparing for a busier, riskier market in 2026.”
Tindall noted households have never been more cashed-up, with offset accounts providing borrowers a buffer and confidence to stay in the market.
Property prices are forecast to climb significantly despite no further rate cuts expected. Median values could rise by as much as $134,000 over the next two years, according to forecasts.
“Put it all together and 2026 is shaping up to be a year where the market is likely to keep marching upwards, fuelled by cashed-up borrowers, hungry investors and limited supply, even if rates stay elevated,” Tindall said.
The total value of new loans funded in the September quarter reached $191.1 billion, up 5% from the previous quarter and 19% from September 2024.
