Brokers Settle a Record Share of Home Loans as Sydney’s Investment Market Cools

Mortgage brokers are now arranging more than three in four new home loans across Australia, and a softening Sydney market paired with the steepest run of rate rises in years is giving property investors fresh reasons to use them.

Brokers facilitated 76.7 per cent of all new residential home loans in the December 2025 quarter, the highest share recorded for any December period since the data series began in 2013, according to figures compiled for the Mortgage and Finance Association of Australia (MFAA) by analytics group Cotality. The channel settled $142.2 billion in new loans over the three months, a 23.6 per cent rise year on year, easing only slightly from the 77.3 per cent recorded three months earlier and sitting just shy of the all-time high of 77.6 per cent reached in the June 2025 quarter. The numbers point to a long-running structural shift in how Australians access housing finance, and that shift is becoming more pronounced as borrowing conditions tighten.

A tougher lending backdrop is changing investor behaviour

The broker result lands in a noticeably harder market. The Reserve Bank lifted the cash rate three times in the first half of 2026, in February, March and May, taking it from 3.60 per cent to 4.35 per cent, before holding steady at its 16 June meeting. Governor Michele Bullock has described the current setting as “a bit restrictive”, and the average new owner-occupier home loan now carries a rate of around 6.25 per cent.

For investors, higher rates feed straight into serviceability assessments. Lenders apply buffers when testing whether a borrower can meet repayments, so each rise trims borrowing capacity. That matters most in Sydney, where the median dwelling value remains close to $1.28 million and the typical house sits well above that. Borrowing power, not deposit size alone, increasingly decides what an investor can buy.

Sydney’s market has turned, and buyers have more leverage

Sydney values have eased for several months and are now running roughly 2.1 per cent below their November 2025 peak, with detached houses under more pressure than units. Sales activity has slowed sharply, auction clearance rates have held below 60 per cent, and vendor discounts have widened, all of which hand active buyers a stronger negotiating position than they have had in some time.

At the same time, investors are leaning back in. Cotality data shows annual credit growth for investor home lending tracking at its fastest pace since 2015, a sign that buyers are looking past short-term softness to a city with entrenched supply constraints and steady population growth. Sydney’s appeal as a long-term hold, capable of delivering both rental income and capital growth, has not gone away, and property continues to draw investors towards luxury residential markets as well as more affordable corridors. What has changed is the difficulty of financing into it.

Why borrowing in Sydney has become more complex

Most investors cannot buy outright, so finance is the gating factor, and it is more involved than many first-time investors expect. Lenders assess a range of factors when reviewing applications, including income, existing debts, living expenses, credit history and the purpose of the purchase. Borrowing capacity can vary widely between institutions, which means an investor who qualifies for one lender’s product may fall short of another’s criteria for the same loan.

That variation has widened as rates have climbed. Some lenders offer more favourable terms to investors with established portfolios, while others target first-time investors, so features such as offset accounts, redraw facilities, fixed-rate options and interest-only periods differ considerably from one institution to the next. Comparing those differences across a tightening market is precisely the task more borrowers are now outsourcing.

What the broker channel offers that a single bank cannot

A mortgage broker acts as an intermediary between borrowers and lenders. Rather than approaching institutions one at a time, an investor works through a single point of contact who can compare products from a broad panel of traditional and online lenders. Banks, by contrast, only offer their own products.

There is also a legal distinction. Unlike bank staff, mortgage brokers are bound by a best interests duty overseen by ASIC, which obliges them to act in the client’s interests. MFAA chief executive Anja Pannek has linked the channel’s growth to that proposition, noting that today’s lending environment presents borrowers with a wide array of lenders, products and information, and that the key question is not simply price but which product genuinely fits a borrower’s circumstances.

Sydney brokerages operating in the investor segment, including firms such as AFMS Group, work across pre-approvals, documentation, lender comparisons and loan structuring, the parts of the process where lender policies change frequently and small differences in product features can affect an investor’s plans for years.

What investors are weighing before they apply

Brokers and industry data point to a few consistent themes for anyone assessing the current market. The first is a realistic read on borrowing capacity. Reviewing income, expenses, debts and savings against today’s higher serviceability buffers gives investors a clearer sense of their genuine price ceiling before they start searching.

The second is the full cost of acquisition. Beyond the purchase price, investors face stamp duty, legal fees, building inspections, insurance and ongoing maintenance, all of which shape the working budget. The third is loan structure. With many investors intending to expand a portfolio over time, the structure put in place on a first or next purchase can influence future borrowing opportunities, a consideration that has sharpened now that capacity is harder to come by.

For now, the direction of travel is clear. As lending conditions stay restrictive and Sydney’s market remains selective, brokers look set to keep settling a record share of the loans behind it.