Australian Home Loans Suffer Record 15.5% Quarterly Collapse

New home loan commitments in Australia fell 15.5% to 81.2 billion AUD in the September quarter of 2026, the largest quarterly decline since records began in 2002. The downturn was led by a 32.3% plunge in the value of investor loans and a 30.6% drop in investor loan numbers. First-home buyer commitments also fell 8.6%, reaching their lowest level since December 2022.

Michele Bullock, Governor of the Reserve Bank of Australia, attributed the steep decline to a combination of five interest rate hikes in 2026—bringing the key rate to an 18-year high of 4.85%—and federal budget reforms from May. These reforms ended negative gearing for established homes and restricted capital gains tax discounts. New South Wales and Queensland were hardest hit, with investor lending falling 47% and 44% respectively since December peaks.

Industry reactions are divided. Housing Minister Clare O'Neil welcomed the shift as a move toward owner-occupancy. Conversely, opposition figures and property groups argue the tax changes decimated market confidence and will reduce rental availability. The Commonwealth Bank of Australia reported a 16% drop in new applications for the quarter and a rise in 90-day arrears to 0.8%, causing its shares to fall nearly two percent.