New lending to property investors in Australia fell at its fastest pace on record in the three months to September, as landlords faced the combined pressure of rising interest rates, falling property prices, and higher taxes.
The Commonwealth Bank, Australia’s largest lender, confirmed that the share of its customers struggling to repay their mortgages had reached a 12-year high. The bank did not provide specific figures but indicated that mortgage stress among its borrowers had increased steadily in recent months.
This sharp decline in investor lending comes amid a broader cooling in the property market, where price falls have altered the financial calculus for many landlords. Higher taxes introduced in recent years have further squeezed returns, while interest rate rises have increased borrowing costs.
The drop in new lending to property investors was the fastest on record, according to data covering the quarter ending September. This suggests investors are withdrawing or pausing their activity amid less favourable conditions.
Commonwealth Bank’s report on mortgage repayment difficulties signals wider economic stress. Mortgage stress refers to the share of borrowers struggling to meet repayments, a key indicator of financial strain. This latest peak is the highest since around 2014, when the housing market was also under pressure.
The bank’s figures come as the Reserve Bank of Australia has kept interest rates elevated in response to inflation concerns, maintaining borrowing costs above levels seen in the early 2020s. Rising rates have pushed monthly mortgage bills higher for many.
Investors have faced a squeeze from several directions. Property values have fallen in many Australian cities after a prolonged boom, eroding equity cushions. At the same time, government measures to tax investment properties more heavily have reduced after-tax returns.
The trend contrasts with owner-occupier lending, which has generally been more resilient despite the tougher environment. Owner-occupiers often have different motivations and longer time horizons than investors, which can affect borrowing behaviour.
The Commonwealth Bank’s data does not break down mortgage stress by borrower type, but the overall increase aligns with the reported slump in investor demand.
Mortgage stress at this level typically leads to higher default rates and can contribute to slower lending growth as banks tighten criteria. The bank’s update suggests lenders are closely monitoring repayment difficulties amid a changing property landscape.
This quarter’s sharp fall in new lending to property investors marks a notable moment in the Australian housing market cycle. It reflects the impact of policy changes and economic conditions that have reshaped investment appetite in residential real estate.
The Commonwealth Bank’s 12-year high in mortgage stress underscores the financial challenges facing many borrowers as interest rates remain elevated and property prices have retreated.
Investors adjusting their portfolios amid these conditions may slow market activity further, affecting future lending and property development.
According to The Guardian.
