Home buyer’s tighten spending off the back of of consecutive rate hikes

Successive increases in cash rates have put pressure on some homebuyers’ budgets, new analysis from Canstar shows.

During the March 2026 quarter, the average size of new national loans fell from a record high late last year, with declines in key markets NSW and Victoria, where property prices fell.

As the market changed, household budgets also remained pressured by the high cost of living.

The financial comparison website’s data showed that home-owning borrowers drove the decline, with the value of new loans falling by $2.8 billion from the record December 2025 quarter.

The data showed investors were also pulling back, with the value of new loans falling by $1.3 billion in the first three months of the year.

Canstar said that despite the dip, new lending remained well above year-ago levels, with an 18 percent increase for all loans, led by investors, which rose 25 percent year-on-year.

However, Sally Tindall, Canstar’s director of data insights, said borrowing needs are still at high levels, with investors leading the way.

“With growth at that rate, it’s easy to see why housing is at the heart of the federal budget, with the government under pressure to ease affordability restrictions for younger Australians.

‘First home buyers came out of the gate at the end of last year, after the phasing out of the Home Guarantee in October.

“However, the initial frenzy appears to be cooling off thanks to the RBA’s return to rate hikes.”

Tindall said affordability remains the Achilles heel of the housing market.

“The softening of prices in Sydney and Melbourne is not what golden ticket buyers had hoped for, with rate hikes eroding borrowing power much faster than prices are falling,” she said.

‘The challenge for the first home buyers who did manage to buy at peak prices with razor-thin deposits last year is that prices are falling in cities like Sydney and Melbourne.

“The March quarter could mark the start of a more cautious phase for the property market, especially as borrowers continue to face rising repayments and tighter household budgets.”

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