The Big Picture: Lending Is Surging
The Australian Bureau of Statistics released its latest Lending Indicators report for the December Quarter 2025, and the numbers tell a clear story: Australians are borrowing more, and they’re borrowing bigger.
Total new housing loan commitments grew 5.1% in number and 9.5% in value compared to the previous quarter. That gap between volume growth and value growth means the average loan size is increasing — borrowers aren’t just taking out more loans, they’re taking out larger ones.
Source: ABS Lending Indicators, December Quarter 2025. Next release covering March Quarter 2026 is due 13 May 2026.
As a broker who sees these trends play out in real applications every day, the numbers match what I’m experiencing on the ground. Enquiries are up, loan sizes are up, and competition between lenders is fierce. Let’s break down what each segment looks like.
Owner-Occupier Lending: What the Numbers Show
Owner-occupier lending — people borrowing to buy a home they’ll live in — grew 4.8% by number and 10.6% by value in the December quarter. Again, that value growth outpacing volume tells you loan sizes are rising.
The key owner-occupier figures:
- Average loan size (national): $693,801
- Average monthly repayment: $3,935
- Average interest rate: 5.49%
To put that in perspective, the average Australian borrower is paying nearly $47,220 per year in mortgage repayments. That’s before rates, insurance, or maintenance. On a median household income of around $105,000 (pre-tax), the mortgage alone consumes a significant share.
The average rate of 5.49% also deserves attention. The RBA cash rate sits at 3.85%, which means the average borrower is paying a 1.64% margin above the cash rate. Some of that is the normal bank margin, but in my experience, many borrowers are paying more than they need to because they haven’t reviewed their rate in 12+ months. A quick comparison through a broker can often shave 0.3–0.5% off that rate — which on $693,801 saves $130–$215 per month.
Investment Lending Hits Record Levels
This is the headline number that should make everyone pay attention. Investment property lending reached a record $42.9 billion in the December Quarter 2025 — up an extraordinary 31.8% year-on-year.
The key investor figures:
- Quarterly growth: +5.5% (number), +7.9% (value)
- Number of investor loans: 60,455
- Average investor loan: $717,000 (up $43,000 from previous year)
- Record high: Yes — highest quarterly value ever recorded
The average investor loan of $717,000 is now $23,199 higher than the average owner-occupier loan. Investors typically borrow more because they’re buying established properties in high-demand rental areas, and many are leveraging equity from their existing home.
Investor lending by state
| State | Avg Investor Loan | vs National Avg ($717K) |
|---|---|---|
| NSW | $873,000 | +$156,000 |
| WA | $644,000 | -$73,000 |
| SA | $622,000 | -$95,000 |
| NT | $460,000 | -$257,000 |
NSW is the only state where the average investor loan exceeds the national benchmark. That $873,000 average reflects the price premium of Sydney and surrounds, where rental yields and capital growth continue to attract investor capital.
For more on investment property lending, including LVR requirements and lender comparison, read our investment property loans guide.
First Home Buyers Are Back in Force
First home buyer lending surged 6.8% by number and 15.5% by value in the December quarter — the largest quarterly rise since December 2023.
- Number of FHB loans: 31,783
- Total value: $19.3 billion
- Average FHB loan: $607,624 (up 8.5% on the quarter)
31,783 first home buyers got into the market in one quarter. That’s encouraging, especially given that the national median home value is now $912,465. These buyers are clearly finding ways in — helped by government schemes, family support, and willingness to compromise on location.
The ABS attributes the growth partly to the expansion of the 5% Deposit Guarantee and the launch of the Help to Buy shared equity scheme. Both have made it significantly easier for first home buyers to enter the market with smaller deposits. Read our first home buyer guide for the full breakdown of what’s available.
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Average Loan Size by State
One of the most useful things about the ABS data is the state-by-state breakdown. Average loan sizes vary dramatically across Australia, driven by property prices, incomes, and local market conditions.
| State/Territory | Avg Loan Size | Monthly Repayment | Annual Repayment |
|---|---|---|---|
| NSW | $828,065 | $4,696 | $56,352 |
| QLD | $687,161 | $3,897 | $46,764 |
| VIC | $646,577 | $3,667 | $44,004 |
| WA | $632,901 | $3,590 | $43,080 |
| ACT | $628,377 | $3,564 | $42,768 |
| SA | $616,428 | $3,496 | $41,952 |
| TAS | $483,920 | $2,745 | $32,940 |
| NT | $481,164 | $2,729 | $32,748 |
Repayments based on 30-year P&I loan at the average rate of 5.49%. Source: ABS Lending Indicators, December Quarter 2025.
The gap between NSW and the NT is $346,901 in loan size and $1,967 per month in repayments. Over a year, that’s a $23,604 difference in what borrowers are paying purely because of where they live.
Queensland has overtaken Victoria for the second-highest average loan size, reflecting the post-pandemic migration to the Sunshine State that has pushed property prices higher in SEQ. Victoria, meanwhile, has seen more moderate price growth, keeping average loans slightly lower.
For a detailed breakdown of what you’re paying by state, read our home loan repayments by state guide.
What’s Driving the Growth?
Four factors are behind the lending surge:
1. The 2025 rate cuts
Three rate cuts between February and August 2025 took the cash rate from 4.35% to 3.60%, boosting borrowing power and confidence. Even though the RBA hiked in February 2026, the net effect over 12 months is still a reduction from where rates were in early 2025. Lower rates mean higher borrowing capacity, which means buyers can afford to borrow more.
2. Rising property prices
The national median home value reached $912,465 in January 2026. As property prices rise, so do the loans required to purchase them. This is a simple mechanical relationship — if houses cost more, people borrow more to buy them.
3. Government schemes
The expansion of the 5% Deposit Guarantee and the launch of Help to Buy have brought thousands of first home buyers into the market who otherwise would have been sidelined. These schemes reduce the deposit barrier and, in the case of Help to Buy, reduce the amount borrowers need to borrow (the government contributes equity).
4. Population growth and housing undersupply
Australia’s population continues to grow faster than housing supply can keep up. Net overseas migration remains elevated, and housing construction completions are well below the targets needed to match demand. This supply-demand imbalance keeps upward pressure on prices and rents, which in turn keeps lending volumes growing.
The Affordability Question
The numbers paint an uncomfortable picture when you look at affordability. The average monthly repayment of $3,935 at the current average rate of 5.49% represents a significant chunk of household income.
Repayments as a percentage of income
Using median household income estimates for each state, the mortgage burden looks like this:
| State | Monthly Repayment | Est. Median Household Income (Monthly) | Mortgage-to-Income Ratio |
|---|---|---|---|
| NSW | $4,696 | $9,170 | 51.2% |
| QLD | $3,897 | $8,330 | 46.8% |
| VIC | $3,667 | $8,750 | 41.9% |
| ACT | $3,564 | $10,420 | 34.2% |
| WA | $3,590 | $9,580 | 37.5% |
| SA | $3,496 | $7,920 | 44.1% |
| TAS | $2,745 | $7,500 | 36.6% |
| NT | $2,729 | $8,750 | 31.2% |
Income estimates are approximate, based on ABS Household Income and Wealth data. The mortgage-to-income ratio uses gross (pre-tax) household income.
NSW borrowers are dedicating over half their gross household income to mortgage repayments. The generally accepted “safe” threshold is 30% of gross income. Every state except the NT and ACT exceeds that threshold on average loan sizes.
This doesn’t mean borrowers are overextended — many households have dual incomes, existing equity, and other assets. But it does highlight why rate sensitivity is so high right now. Even a small rate increase has an outsized impact when repayments already consume 40-50% of income.
To understand how much you can realistically borrow, read our borrowing power guide.
What This Means for You as a Borrower
If you’re a first home buyer
The data is encouraging. 31,783 buyers got into the market last quarter, and the average FHB loan of $607,624 is well below the national average. Government schemes are making a real difference. If you’re saving for a deposit, the 5% Deposit Guarantee means you might be closer than you think. Read our deposit guide for the full breakdown.
If you’re an investor
The record-high lending volumes signal strong market confidence, but they should also make you cautious. When everyone is piling in, that’s often a signal to be more selective, not less. Focus on fundamentals: rental yield, vacancy rates, population growth in your target area. And be aware that APRA may step in with lending restrictions if investor growth continues at this pace. Check our investment property loans guide.
If you’re looking to refinance
The data shows the average rate is 5.49%, but the best rates from competitive lenders start well below that. If you’re paying above 5.49%, you’re almost certainly paying too much. Even if you’re paying the average, shopping around could save you. Competition between 83 lenders on our panel means there are genuine deals available. See our refinancing guide.
If you’re upgrading
The equity growth from rising property values may mean you have more upgrading capacity than you realise. If your existing property has grown in value, that equity can fund the gap between your current home and the next one — potentially without needing additional savings. Talk to a broker to run the numbers.
Frequently Asked Questions
What is the average home loan size in Australia in 2026?
The average owner-occupier home loan is $693,801 as of December Quarter 2025 (latest ABS data). This varies by state — from $828,065 in NSW to $481,164 in the NT. The average investment property loan is $717,000.
How many first home buyer loans were approved last quarter?
31,783 first home buyer loans were approved in December Quarter 2025, worth $19.3 billion. This was a 6.8% increase in number and 15.5% in value — the largest quarterly rise since December 2023.
Which state has the highest average home loan?
New South Wales has the highest average loan at $828,065 with monthly repayments of $4,696. Queensland is second at $687,161, followed by Victoria at $646,577.
Is investment lending increasing in Australia?
Yes, dramatically. Investment lending hit a record $42.9 billion in December Quarter 2025, up 31.8% year-on-year. The number of investor loans reached 60,455 with an average loan size of $717,000.
What is the average monthly mortgage repayment in Australia?
The average monthly repayment for owner-occupiers is $3,935, based on the national average loan of $693,801 at an average rate of 5.49%. This ranges from $2,729 in the NT to $4,696 in NSW.
Where does the ABS lending data come from?
The ABS Lending Indicators report is published quarterly by the Australian Bureau of Statistics, covering all new loan commitments from banks, credit unions, and other lenders. The next release (March Quarter 2026) is due 13 May 2026.
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