The RBA's October Financial Stability Review finds investor credit growth has slowed from a strong 2025 pace, while minutes of the September Board meeting show investors leading a sharp fall in new housing loan commitments.

Investor borrowing grew at a strong pace in 2025. By the time the Reserve Bank released its October 2026 Financial Stability Review (FSR) on 1 October, that momentum had faded.

The FSR's chapter on the resilience of households and businesses says housing credit growth has eased overall, and that investor credit growth has slowed from a strong pace in 2025. A separate document points the same way: the minutes of the Monetary Policy Board's September meeting, published on 13 October, note that new housing loan commitments fell sharply, led by investors.

Taken together, the two sources describe a cooling in landlord borrowing at both ends of the pipeline: the stock of debt is growing more slowly, and the flow of new loans has dropped.

Two measures, one direction

It helps to be clear about what each measure captures.

  • Credit growth tracks the change in the total amount of debt outstanding. It moves gradually, because it reflects every existing loan as well as new lending and repayments.
  • Loan commitments track new loans that lenders have agreed to provide. They tend to respond more quickly to changes in borrower demand and conditions.

The FSR's finding concerns the first measure; the minutes' observation concerns the second. Neither source, as summarised here, gives a precise percentage for investor credit growth, so this article does not quote one. What both make clear is the direction of travel.

The contrast with business borrowing is notable. The FSR says business credit growth "remains strong" and has been above its post-global financial crisis average for a couple of years, and the September minutes describe business credit growth as very strong and broadly based.

The backdrop: higher rates and softer prices

The slowdown in investor lending has occurred as borrowing costs have risen. On 29 September the Board unanimously raised the cash rate target by 25 basis points to 4.60 per cent, effective 30 September. Governor Michele Bullock said it was the fourth increase in 2026, including three earlier in the year between February and May. That followed rate cuts in 2025, including reductions in February and May of that year.

At the same time, housing prices have fallen in most capital cities, according to the Board's decision statement. The minutes go further, saying prices fell by more than expected and that staff judged the cumulative fall was likely to be greater than had been assumed in August.

In general terms, investors who borrow to buy property face interest costs that rise with variable rates, and their returns depend partly on how property values change over time. Both of those conditions have shifted in 2026. The RBA documents do not attribute the slowdown in investor credit to any single cause, and readers should not assume one.

What the RBA says about housing risk more broadly

Much of the borrower-level data in the FSR relates to owner-occupiers rather than investors specifically. For variable-rate owner-occupier borrowers, the FSR says the share in cash-flow shortfall "increased a little over the first half of 2026, but remains relatively low at around 2 per cent". These figures should not be read as a measure of investor stress, which the facts summarised here do not quantify.

Some broader housing indicators are relevant to all borrowers:

  • Arrears: the share of housing loans 90 or more days in arrears "has increased a little over the year to date but remains around pre-pandemic levels".
  • Negative equity: the FSR says "less than 1 per cent of borrowers" are currently in negative equity. The September minutes add that very few borrowers would be in negative equity even if housing prices fell 20 per cent.
  • Price falls and the economy: scenario analysis discussed in the minutes found that "even relatively large falls in housing prices would have only modest direct effects."

The FSR's stress test of the banking system also included a scenario in which housing and commercial property prices fall 20 per cent, alongside unemployment rising to 6.3 per cent, the cash rate rising to 5.6 per cent and a severe contraction in GDP. Under that scenario, banks' Common Equity Tier 1 capital ratio, 12.4 per cent in June 2026, was "estimated to decline to around 11.6 per cent".

Lending standards and the road ahead

Even with investor credit cooling, the RBA's recommendations in the FSR include keeping lending standards sound. The other recommendations cover maintaining operational resilience, including at critical service providers; strengthening liquidity risk management in superannuation; and improving risk management, scenario analysis and crisis simulations.

The RBA's overall assessment is that "The Australian financial system has a good degree of resilience", although the accompanying media release notes that global and operational vulnerabilities are growing. The FSR also observes that non-bank lenders account for around 6 per cent of financial system assets, and the media release says their risks are "contained by their relatively small size".

For investors, the practical message from the FSR is descriptive rather than prescriptive. It records that the pace of investor borrowing has eased after a strong 2025, that housing prices have softened, and that the system overall is assessed as resilient. It does not say how investors should respond.

Looking ahead, several scheduled events could add to the picture:

  • the next cash rate decision, due at 2.30 pm on 3 November 2026;
  • the November Statement on Monetary Policy, listed in the RBA calendar for that month;
  • the next CPI update, listed for 28 October 2026.

The minutes record that, at the time of the September meeting, market pricing implied a further increase of around 15 basis points by the end of the year. That is market pricing, not an RBA forecast, and the Board's statement says it "will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions."

The bottom line

The October FSR confirms that investor credit growth has slowed from its strong 2025 pace, and the Board's September minutes show investors leading a sharp fall in new housing loan commitments. That shift comes as the cash rate has risen to 4.60 per cent and housing prices have fallen in most capital cities. The RBA's published data on cash-flow stress and buffers mostly concern owner-occupiers, so they offer only an indirect read on investors. Anyone considering how these conditions affect their own property or borrowing plans may wish to seek advice from a licensed professional.