Australia’s mortgage market may take more than a decade to recover to the levels seen during the Covid housing boom, with forecasts suggesting the average new home loan will exceed $1.1 million by the time lending volumes rebound.
New analysis by Money.com.au, based on ABS lending data, shows that daily home loan approvals peaked at 1,322 in the March quarter of 2021, fuelled by record-low interest rates of 0.10 per cent and pandemic-era government incentives.
By March 2023, as the Reserve Bank lifted rates at speed, volumes had dropped by more than a third to 822 a day.
Although lending has since stabilised, averaging 890 daily approvals in the June quarter of 2025, growth has been slow.
At this pace, Money.com.au projects that home lending will not return to its previous highs until at least 2036, when daily volumes are expected to reach about 1,327.
By then, the average loan size is tipped to rise to $1,145,982 — up 69 per cent on today’s $676,434.
Money.com.au mortgage expert Debbie Hays said the figures underline how quickly market conditions can swing.
“The stimulus-fuelled peak of 2021 was short-lived, and led to a major trough which we’re still slowly digging our way out of,” she said.
“The fact it will take a decade to return to those levels under normal growth shows just how distorting housing bubbles can be to the wider market.”
Ms Hays warned that borrowers face a far more difficult environment than during the pandemic upswing, citing bigger loans relative to incomes, rising affordability pressures, uncertainty in the jobs market due to AI, and an ongoing housing shortage.
“That’s if another global shock doesn’t intervene before then,” she said.
