What the investor lending surge means for owner-occupiers and first home buyers
Investor home loans in Australia are growing at their fastest rate in more than a decade, even as the RBA pushes interest rates higher. New RBA data shows bank lending to property investors climbed by $42 billion in the year to March 2026, a 9.6% increase and the strongest growth since September 2015.
For owner-occupiers and first home buyers, this shift is already being felt. If you are trying to understand how the latest RBA rate hikes are reshaping the lending landscape, read on.
Investor lending
Despite three rate rises from the RBA in 2026 alone, investor appetite for property has not slowed. Bank loans to investors reached $42 billion in new growth over the 12 months to March. That 9.6% rise outpaced every year of growth since 2015.
Investors appear undeterred by higher borrowing costs. Many are betting on long-term capital growth, and some have taken on interest-only loans to keep short-term repayments lower. ANZ and NAB have both reported that investors made up more than two-fifths of all new home loans written in the six months to March 2026, a significant shift from historical norms.
Owner-occupiers slow down
While investor lending surged, lending to owner-occupiers grew at just 6.2% in the year to March. That growth rate has been falling since December 2025, as consecutive rate rises price more buyers out of the market.
Auction clearance rates across Australia have dropped to below 60%, a sign that buyer confidence is weakening. House prices have softened in Sydney and Melbourne as higher rates compress how much people can borrow. If you are unsure how rate rises have affected your position, it is worth checking your borrowing power using a free calculator to see where you stand today.
First home buyers squeezed out
The impact on first home buyers has been sharp. Following the March 2026 rate rise, some mortgage brokers reported applications from first home buyers fell by a third. One Sydney broker noted a dramatic reversal: where he once saw four owner-occupier applications for every investor, he now sees four investors for every first home buyer.
That reversal tells a clear story. With each rate rise, the pool of buyers who can qualify for a home loan shrinks. Investors, who often have existing equity and more flexible structures, are better positioned to absorb higher rates. Knowing why your borrowing power may have declined is a useful first step in understanding your options.
Interest-only loans rising
A notable trend within investor lending is the growing use of interest-only loans. With rates at their current levels, more investors are opting for repayment structures that lower monthly costs now but leave the full loan balance untouched.
Interest-only loans can work well as a short-term strategy when property values are rising and cash flow matters. But they come with trade-offs: you are not reducing your debt, and when the interest-only period ends, repayments jump. Lenders at ANZ and NAB have noted this trend growing across their investor books.
What to do now
Investor home loans growing at a decade-high rate does not mean first home buyers or owner-occupiers should give up. It does mean the market is shifting, and your approach needs to adapt.
Whether you are trying to buy your first home or add an investment property, working with a broker who understands current lender appetite can make a real difference. Some lenders are adjusting their policies quickly in response to rate changes, and the right loan structure matters more than ever right now.
If you are weighing up whether to buy now or hold back, read our guide on buying property with interest rates rising to help frame your decision.
Common questions
Q: Are investor home loans making it harder for first home buyers to compete?
Yes, in part. When investors make up a growing share of new lending, they compete for the same properties, particularly in entry-level price brackets. Many investors do target different property types to first home buyers. A broker can help you identify areas and price points where competition from investors is lower.
Q: Should I consider an interest-only loan as an investor?
Interest-only loans reduce short-term cash flow pressure, which is why more investors are choosing them now. But they suit specific strategies, usually where you expect capital growth or strong rental income to justify the higher long-term cost. Speak to a mortgage broker to find out if this structure suits your situation.
Q: Will investor borrowing slow as rates keep rising?
Most economists expect so. ANZ has noted that further rate rises will likely constrain investor activity in the months ahead. Markets are pricing in at least one more RBA increase before the end of 2026, which may temper some of the current investor enthusiasm.