What's Happening in Home Loan Lending Right Now
September 2026 update
Australia's home lending market is sending some mixed signals this month, and if you're weighing up buying, refinancing, or just keeping an eye on your mortgage, here's what the latest figures actually mean for you.
The Cash Rate: On Hold, For Now
The Reserve Bank of Australia has kept the cash rate steady at 4.35% since its August meeting, following three rate hikes earlier in the year. The Board's next call is due on 29 September, and economists are divided — some expect another hold while the RBA watches how the earlier increases are working through the economy, while others aren't ruling out a further move if inflation data doesn't cooperate.
The inflation picture is genuinely mixed: headline inflation eased in July, but underlying (trimmed mean) inflation held firmer at 3.6%, which is exactly the kind of detail that keeps rate decisions unpredictable.
Refinancing Is Cooling — But Not Evenly
Fresh ABS Lending Indicators data for the June quarter shows refinancing activity has come off the boil overall. Owner-occupiers refinancing to a new lender dropped around 2.8% for the quarter, to $41.9 billion — though that's still up on where it was a year ago.
Investors are telling a different story entirely. Investor refinancing barely moved quarter-on-quarter but is up roughly 12% year-on-year, suggesting investor borrowers are still actively shopping around for a better deal even as owner-occupiers slow down.
First Home Buyers Are Holding Their Ground
One of the more reassuring numbers in the data: first home buyer lending has held up better than any other segment, down only slightly in volume with values essentially flat. Total new lending commitments overall fell more sharply, and investor lending dropped even further. That tells us lenders haven't pulled back their appetite for first home buyers — even in a softer overall market.
Borrowing Power Remains the Real Constraint
For a lot of borrowers, it's not lender appetite holding things back — it's the numbers. APRA's serviceability buffer still tests every application at your contracted rate plus 3 percentage points, which can shave $80,000–$120,000 off your maximum borrowing capacity on a typical household income. Combined with elevated mortgage stress readings (recent Roy Morgan data put the share of at-risk mortgage holders at an 18-year high), it's clear plenty of households are feeling the squeeze even with rates on hold.
What This Means If You're Buying or Refinancing
- If you're a first home buyer, the data suggests lenders are still competing for your business — it's worth getting your borrowing capacity properly assessed rather than assuming the market has closed up.
- If you're refinancing, don't assume your current rate is still competitive just because the market has slowed — investor borrowers refinancing at record rates suggests there are still real savings on the table.
- If you're feeling mortgage stress, a proper stress-test of your repayments and a look at your options (including term-for-term refinancing) is worth doing sooner rather than later.
Every situation is different, and headline figures never tell the whole story for your circumstances. If you'd like to talk through what any of this means for your own home loan or borrowing power, get in touch with Freedom Mortgage Services.
