Australian property investors have unleashed a record-breaking borrowing spree, accounting for two in every five home loans amid growing concerns about an overheated credit market.
Record investor borrowing fuels housing market
New data from the Australian Bureau of Statistics reveals that investors borrowed nearly $40 billion across more than 57,000 loans during the July to September quarter. This represents a dramatic 17.6% increase in loan value compared to the previous three months, while the number of new investment loans jumped by 13.6%.
The surge has pushed investor participation to unprecedented levels, with property investors now responsible for 40% of all home loans in the Australian market. Meanwhile, owner-occupier loan numbers increased by just 2% over the same period, highlighting the growing disparity between investor and residential buyer activity.
First home buyers left behind
The investor boom comes at the expense of first-time buyers, who saw minimal growth in lending. First home buyer numbers rose just 2.3% in the September quarter compared to the previous three months, but actually fell by 0.23% overall in the year to September compared with the previous year.
Mish Tan, the ABS head of finance statistics, attributed the 2025 acceleration to interest rate cuts and low vacancy rates in rental housing. The Reserve Bank noted that investor credit was growing at its fastest pace since 2015, having picked up even before the RBA cut interest rates three times in 2025.
Calls for regulatory intervention
The rapid growth has prompted urgent calls for government intervention. Greens senator Barbara Pocock has demanded that the Australian Prudential Regulation Authority (APRA) step in to cool the market.
"We need to urgently rein in an overheated credit market for property investors," Pocock stated. She has written to both APRA head John Lonsdale and Treasurer Jim Chalmers, urging them to "pull the handbrake" on investor lending.
The current situation echoes 2014, when rapid rises in investor lending prompted APRA to warn banks it would treat annual growth rates above 10% as a risk. Wednesday's data showed investor credit rising at nearly double that threshold.
Major banks are also feeling the impact. Westpac and NAB's annual results showed investors accounted for more than two-fifths of new home loans at both institutions in the six months to September.
Westpac's chief executive Anthony Miller acknowledged the need for caution, stating: "We've just got to... be careful about the outlook and the risks that come from going too far too fast in a particular segment."
The borrowing surge coincides with rapidly rising house prices, which recorded their fastest monthly increase in two years in October, up 1.1% or a median $10,000. Property values have already risen more than 6% in 2025 alone.
While RBA governor Michele Bullock suggested intervention could help stabilise the housing market following future rate cuts, she indicated such measures weren't currently necessary. An APRA spokesperson confirmed the regulator was monitoring for risky lending and discussing potential limits with banks.
