Why did Australian home loan volumes fall in the March quarter of 2026?

The number of new home loans dropped 6.2% to 139,794 following consecutive cash rate hikes by the central bank in February and March. This downturn ended a period of sustained growth seen throughout 2025.

How does current Australian mortgage activity compare to last year?

Despite the 6.2% quarterly dip, total lending activity remains historically high. The number of new home loans is 8.6% higher than the same period last year, while the total value of those loans has surged by 18.5% year-on-year.

What is the current average home loan size in Australia?

The average home loan size has reached $724,415, representing a 9.0% increase over the past twelve months. This growth in loan size is a direct reflection of rising property prices across the country.

Why is the total value of Australian home loans rising while the number of loans falls?

A persistent trend since late 2023 shows that the value of new lending is outpacing the actual volume of loans being issued. This occurs because property prices are rising faster than the rate at which new buyers are entering the market.

How are first home buyers (FHB) performing in the 2026 property market?

Owner-occupied loans for first home buyers fell 4.3% in the March quarter, following a surge in late 2025. This segment is currently "recalibrating" after the expansion of the Australian Government’s 5% Deposit Scheme previously pulled demand forward.

New Aussie home loans fall following rate hikes

Written by Heidi Cuthbert Published May. 13 2026Last Updated May. 13 2026

The Australian property market showed signs of a cooling trend as the Australian Bureau of Statistics revealed a 6.2% decline in new home loans for the March quarter of 2026.

Data indicates that total loan numbers settled at 139,794, ending a period of sustained growth seen throughout the previous year.

Dr Mish Tan, ABS head of finance statistics, attributed the downturn to recent fiscal shifts, noting that falls were recorded across all borrower categories following cash rate hikes in February and March.

Despite the quarterly dip, Tan emphasised that lending remains 8.6% higher than this time last year.

The total value of new loans also retracted by 3.8% to $103.0 billion; however, the annual value has surged by 18.5%, reflecting a persistent trend where lending value outpaces loan volume.

The average home loan has climbed to $724,415—a 9.0 per cent annual increase—driven by rising property prices, particularly in Western Australia, Queensland, and South Australia.

First home buyers were not immune to the shift, with owner-occupied loans in this sector falling 4.3%.

While most regions saw declines, the Australian Capital Territory bucked the trend with a 6.5% increase.

Experts suggest the market is recalibrating after the December quarter’s surge, which was bolstered by the expansion of the Australian government's 5% deposit scheme.

Despite the quarterly contraction, the first-time homebuyer market remains 17.9% higher in value compared to a year ago.