Australia’s mortgage market has surged in dollar terms even as loan numbers remain below their pandemic peak, according to Money.com.au’s latest Mortgage Insights Report for the year to December 2025.
Mortgage values broke through the $100 billion barrier in a single quarter for the first time, hitting $115.18 billion in the three months to December 2025 – a 23.6% year-on-year jump. This is original, non-seasonally adjusted data. But the total number of mortgages issued annually, at 556,092, is still 12% below the 2021 peak of 628,520 loans. With the average loan size up 24.7% since 2021, the report highlights how rising property prices are doing much of the work in driving market growth.
The investor segment is a standout. Investor loans grabbed a record 39% share of the mortgage market in 2025, with loan numbers rising 12% over the year – three times the 4% growth recorded among owner-occupiers. Investor loans for existing dwellings jumped 15% and now account for 82% of investor lending, while loans for alterations also climbed 15%.
Money.com.au Property Expert Debbie Hays (pictured) says more investors are turning to renovation and improvement strategies rather than new builds.
“Many investors already have the equity and capital to upgrade existing properties, lift rental returns, and manufacture additional equity to reinvest,” Hays said. “With correct structure and negative gearing strategies in place, renovations can be a powerful portfolio growth strategy while the construction pipeline remains subdued.”
Overall investor lending is projected to rise 13% in 2026 to 246,598 loans if current trends continue.
Owner‑occupier first‑home buyer (FHB) loans reached their highest annual level since 2021, helped by the federal 5% Deposit Scheme. The December 2025 quarter alone was up 10% year‑on‑year, with New South Wales leading the charge as quarterly FHB loans there jumped 20%, pushing annual growth for the state back into positive territory at 2%.
However, much of the impact is showing up in loan sizes rather than broad-based access. Average FHB loan sizes rose sharply in Western Australia and Queensland, up 13% and 12% respectively over the year. Despite the recent uplift, overall FHB volumes remain relatively subdued and are expected to increase by 11% in 2026 to 140,081 loans – still constrained by ongoing price pressures, high living costs and the prospect of further cash rate rises.
By contrast, construction-related lending remains in a slump. Owner-occupier land and construction loans flatlined at just 56,686 over the past year, leaving volumes 58% below their 2021 peak – 77,490 loans lower – even as overall owner-occupier lending rose 4% annually.
“The lending market is continuing its recovery from the 2021 heyday, but construction is barely budging, which means supply is not improving. Until construction activity meaningfully rebounds, the supply squeeze will continue to put upward pressure on house prices and rents,” Hays says.
That backdrop means slower price growth in 2026 won’t automatically improve affordability, with many buyers still constrained by high living costs, tight serviceability buffers, and lending rules that limit their borrowing capacity.
Based on current growth rates, owner-occupier lending is forecast to lift 5% in 2026 to 354,910 loans, while land and construction loans are expected to edge up just 2%.
Refinancing was another major theme in 2025. A record 641,552 loans were refinanced over the year, 20% higher than 2024’s 533,839. Refinance volumes are expected to grow a further 19% in 2026 to 762,437 loans.
Internal refinances reached 232,950 in the past 12 months and are expanding faster than external switches, up 27% annually versus 17% for external refinances. That translates to 12,439 additional internal refinances over the year, compared with 9,894 more external refinances.
With the cash rate rising again, the report expects refinancing activity to keep climbing. Hays notes that “retention pricing doesn’t always keep pace with market competition,” increasing the likelihood that borrowers will look beyond their current lender for a better rate if interest rates move higher in 2026.
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