Consecutive Rate Hikes Cool Australia's Housing Market as Loan Sizes Drop

Australia's housing market is showing signs of cooling following three consecutive cash rate hikes by the Reserve Bank of Australia (RBA), which raised the target rate to 4.35 percent. Analysis from financial comparison website Canstar reveals that these increases have constrained home buyer budgets, leading to a decline in the average national new loan size during the March 2026 quarter. This downturn was particularly pronounced in New South Wales and Victoria, where property prices are already falling. Data indicates that owner-occupier borrowers drove much of this decline, with new loan values dropping by $2.8 billion from the record highs of late 2025. Investor activity also slowed, with a $1.3 billion decrease in new loan values over the first three months of the year. Despite this recent softening, overall lending remains 18 percent higher than the previous year, driven by a 25 percent surge in investor loans. Experts note that while borrowing appetite remains elevated, affordability challenges persist. Rising repayments are eroding borrowing power faster than falling prices in major cities like Sydney and Melbourne can compensate, signaling a potentially more cautious phase for the property market ahead.