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New statistics from the Australian Prudential Regulation Authority (APRA) for the September 2025 quarter show that banks funded $196.3 billion in new residential mortgages during the September quarter, up sharply from $165.0 billion a year earlier.
The share of new investment loans increased to 36.5 per cent of this (just over $71 billion), while owner-occupied loans slipped to 61.1 per cent.
Total mortgage credit outstanding also continued to climb, rising 6.0 per cent year on year to $2.43 trillion. Owner-occupied loans made up 67.3 per cent of the banks’ mortgage books, though this was marginally lower than the previous year, as investment lending ticked up to 30.7 per cent.
Across the broader banking sector, APRA’s Quarterly ADI Performance data showed steady financial momentum. Total ADI assets grew 5.7 per cent to $6.68 trillion in the year to September, while net profit after tax lifted 5.1 per cent to $41.1 billion. The total capital ratio edged up to 20.4 per cent, and the liquidity coverage ratio improved to 133.3 per cent.
Commercial property exposures also saw strong growth, with total exposures rising 8.6 per cent to $471.8 billion and approved limits up 9.2 per cent.
High DTI lending rises
Notably, the APRA data shows that high debt-to-income lending (DTI ≥ 6x) rose slightly to 6.1 per cent over the quarter.
This comes ahead of APRA bringing in new lending curbs for high debt-to-income (DTI) mortgage lending to “pre-emptively contain a build-up of housing-related vulnerabilities in the financial system”.
From 1 February, banks must limit home lending of six times income or more to 20 per cent of their new mortgage lending.
The limit will apply separately to bank owner-occupier and investor lending.
It will not apply to bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings in order to allow for “the smooth functioning of property transactions and avoid constraining incentives for the supply of new housing”.
Only a small number of ADIs are expected to be near the limit for high DTI investor lending at this stage. But APRA has said the move is expected to have greater impact on investors, who typically borrow at higher DTI ratios than owner-occupiers.
APRA said earlier this month that the change was needed as it has observed “a pick-up in some riskier forms of lending over recent months as interest rates have fallen, housing credit growth has picked up to above its longer-term average and housing prices have risen further”.
Lending is booming
The APRA stats confirm that there has been a surge in overall mortgage demand, particularly from first home buyers and investors, following three interest rate cuts this year.
Data from Equifax shows mortgage applications jumped 10.3 per cent year on year in the September quarter – the strongest annual growth since 2021 – with first home buyer inquiries reaching their highest level in more than two years. The ABS has similarly reported a 6.4 per cent rise in new mortgages and a 9.6 per cent increase in the value of loan commitments over the same period.
However, it is the rapid acceleration in investor activity that appears to be of greatest concern to regulators.
Investor lending has grown at three times the rate of owner-occupier lending, with the ABS revealing a record 57,624 investor loans written in the September quarter – surpassing the previous high in early 2022.
Victoria has emerged as the fastest-growing investor market, posting 13 per cent annual growth and contributing to a nationwide upswing supported by rising rental yields and population growth. This renewed investor momentum has coincided with a decline in lending for new builds, land, and construction, placing further pressure on established housing stock and contributing to higher prices and larger average debts.
The share of loans 30–89 days past due fell to 0.47 per cent, although non-performing loans increased to 1.04 per cent.
[Related: Lenders must limit high DTI lending: APRA]