Rising home values are pushing borrowers to take out larger mortgages, with the latest Mortgage Choice Home Loan Report revealing an 8.4% increase in the average loan size during the September quarter. Buyers are now borrowing an average of $661,520, reflecting both elevated property prices and greater borrowing capacity as lending conditions evolve. The shift underscores how competition and constrained supply continue to reshape purchasing behaviour across the country.
Western Australia saw the most dramatic increase, with average loan size rising 11.8% to $588,010. South Australia and the Northern Territory followed closely at 10.6%, while Queensland recorded a 9.7% rise. NSW and the ACT increased by 6.4%, and Victoria/Tasmania recorded more modest growth of 4.6%. The highest average loan size remains firmly in NSW and the ACT, where buyers are now borrowing an average of $752,914 to secure property in Australia’s most expensive housing region.
Mortgage Choice CEO Anthony Waldron attributes these increases to the same pressures driving property prices upward: limited supply, strong demand from both owner-occupiers and investors, and persistent population growth. He notes that with dwelling supply unable to keep pace with household formation, buyers are being forced to stretch their borrowing capacity further than ever.
The report also highlights a significant shift in investor behaviour. Investment loan values are rising faster than owner-occupier loans, indicating renewed confidence in the rental and capital growth outlook. Western Australia and Queensland — two of the nation’s strongest-performing markets — are leading this resurgence.
Additionally, the proportion of investors planning to sell within the next 12 months has dropped from 31% to 23%, suggesting that investors increasingly view property as a stable long-term asset amid rising rents and strong price momentum. Waldron notes that many new investors are younger, with improved access to equity, parental assistance, and new mortgage products designed to support first-time investors.
As loan sizes increase, brokers are reporting higher demand for creative lending solutions, including guarantor loans, lender cashback offers, and shared equity arrangements in markets where they are available. Meanwhile, first-home buyers face mounting challenges as rising borrowing requirements outpace wage growth. Government incentives, such as low-deposit schemes and stamp-duty concessions, remain important drivers for younger buyers attempting to enter the market before prices climb further.
