Owner-occupied lending to cool in 2016

“In contrast, lending to investors in new housing partially recovered previous monthly falls, although the latest level is still below previous peaks,” she said.

According to the figures, the value of lending to investors in the established housing market dropped by 8.7 per cent in October, while the value of lending to investors in the new housing market jumped by 50.6 per cent.

“Lending activity among owner occupiers remained strong in October, although with mortgage interest rate hikes having taken effect in November, we could see this situation change in the months ahead,” Ms Hopkins said.

“The next update to housing finance will provide the very first glimpse of the impact that this change in credit conditions is having.”

Ms Hopkins added that while interest rates remain low, the second half of 2015 has seen credit conditions become tighter.

“The early indications are that residential construction – a key source of support for the broader domestic economy – will be affected,” she added.

According to the figures, six out of the eight states and territories saw the number of loans to owner-occupiers purchasing or constructing new homes decline over October compared to the corresponding period last year.

Tasmania saw the biggest drop at 28.6 per cent, followed by Western Australia at 24.5 per cent, Australian Capital Territory at 20.9 per cent, Queensland at 9.2 per cent, Victoria at 6.0 per cent and South Australia at 2.5 per cent.

New South Wales saw a 7.8 per cent increase in new home lending to owner-occupiers over October 2015, compared to October 2014, while in the Northern Territory the figures were unchanged over this period.

[Related: Lender records surge in Chinese borrower demand]