Growth in dwelling values lifts bank portfolios while tightening serviceability weighs on first-home buyers
Australia’s residential mortgage market reached a new peak in November, with authorised deposit-taking institutions holding a combined $2.41 trillion in home loans, supported by further gains in dwelling values.
According to Canstar’s analysis of the Australian Prudential Regulation Authority’s (APRA) latest monthly banking statistics, banks’ housing loan books expanded by 0.67% over November and 6.36% over the preceding 12 months.
Commonwealth Bank of Australia posted the largest increase in dollar terms, adding $4.6 billion in housing credit during the month, a rise of 0.76%. Macquarie Bank continued its rapid expansion, lifting its mortgage book by $3.6 billion in November, an increase of 2.32% and contributing to almost 24% growth over the year.
ANZ recorded a more subdued result, growing its home loan portfolio by $189 million over the month, or 0.06% – its smallest monthly increase since April 2022.
Over recent years, this pattern of growth has gradually shifted the composition of market share between the major banks and their challengers. Canstar’s assessment of APRA data indicates that six years ago, the major banks collectively controlled 78.3% of residential mortgages held by banks, falling to 73.6% today, with Macquarie’s gains the most prominent.
“The mortgage market posted another robust result in November, growing to a record high of $2.41 trillion, fueled by a property market that’s largely refused to cool,” said Sally Tindall (pictured right), data insights director at Canstar.com.au.
“While the big four banks continue to hold the lion’s share of mortgages, Macquarie remains the standout challenger. With an annual growth rate of nearly 24%, Macquarie is chipping away at the dominance of the majors by offering an alternative that clearly resonates with borrowers.
“Canstar analysis of the APRA data shows six years ago, the majors held 78.3% of all residential mortgages from the banks. Today, that’s slipped down to 73.6%. While this won’t be enough for the majors to hit the panic button, Macquarie’s consistent performance is rattling the cage.”
Canstar’s review notes that the expansion in mortgage balances is closely linked to continued growth in dwelling values. Cotality’s Home Value Index rose 8.6% over 2025, the strongest annual gain since 2021.
While forecasts for 2026 are more restrained amid the prospect of further Reserve Bank of Australia cash rate increases, Canstar’s analysis of Westpac projections using Cotality data suggests national prices are still expected to rise, supported by strong demand and ongoing supply shortages.
Under these projections, the median Sydney house price could climb by more than $79,000 over the year. Median house values in Perth and Adelaide are projected to move above $1 million if prices track Westpac’s forecasts.
“A couple of RBA hikes could take some heat out of the property market by putting a handbrake on the maximum amount people can borrow from the bank, however, it’s unlikely to send prices in reverse,” Tindall said. “Increasing demand for properties, spurred on by the uncapping of the government’s Home Guarantee Scheme and a continued strain on supply, is likely to push prices up even in the face of cash rate hikes.”
For existing borrowers, rising values add to equity positions. For prospective first-home buyers, particularly those targeting entry in 2026, higher prices and possible further rate increases may reduce borrowing power.
Canstar’s modelling indicates that two cash rate rises in 2026 could cut the maximum borrowing capacity of an average-income borrower by about $24,000, although the exact impact would differ between lenders depending on their serviceability settings. First-home buyers borrowing at or near capacity could be most exposed to any tightening in serviceability buffers or higher test rates.
“First-home buyers looking for a way in should prioritise saving a solid deposit and give their budget plenty of wiggle room,” Tindall said, data insights director at Canstar.com.au. “Borrowing every last dollar the bank will lend you comes with risks. Understand what your mortgage repayments would look like if rates rose 3 percentage points further and make sure you’re 100 per cent comfortable paying that money on your current wage.”
For brokers and lenders, the combination of record loan volumes, strong price growth and potential rate rises points to an operating environment where serviceability assessments and credit policy settings are likely to remain central. First-home buyer segments may face increasing affordability constraints, while competition from non-major banks – particularly Macquarie – continues to influence market share outcomes.
Within this context, advisers may need to place greater emphasis on stress-testing scenarios with clients, examining the effects of higher interest rates and possible shifts in household income or expenses, while tracking changes in risk appetite and pricing across both major and challenger banks.
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