Latest lending data from the Australian Bureau of Statistics shows housing loans nationally dropped 4.3 per cent in August, with the largest slumps felt in the owner occupier category, which dropped 6.6 per cent.

Falls in lending were driven by lockdowns encompassing the ACT, Victoria and New South Wales. This has put the brakes on the majority of property sales.

The fall in home lending is in the backdrop of soaring property prices, with latest CoreLogic figures showing home values have boomed 20.3 per cent in the past 12 months.

In August $30.76 billion of new loans were settled, in a period when a significant amount is required to be borrowed to acquire a property.

Compared with a year ago, RateCity figures show the amount borrowed on average in NSW has increased by $111,873, while in the ACT it has jumped by $47,303.

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RateCity research director Sally Tindall said the increased borrowing size was likely to prompt the prudential regulator to implement tougher lending criteria to ensure people were not over-burdening themselves with too much debt.

"Surging property prices have pushed some people into borrowing more than they had ever imagined," Ms Tindall said.

"The issue is only going to get worse if the market keeps rising. APRA's expected intervention is likely to help cool property prices but borrowing caps have the potential to hit first home buyers the hardest unless specific provisions are made for them."

The Council of Financial Regulators and Treasurer Josh Frydenberg have signalled potential clampdowns to cool off the boom and house prices.

The council has flagged that ultra-low interest rates, in combination with a huge demand for housing which is bolstering up prices, is stretching debt-to-income ratios to concerning levels.

ANZ said investor loans had continued to increase and were sitting at a six-year high, while personal lending rose 2.5 per cent over the month.

ANZ senior economist Adelaide Timbrell said, "While investor lending increased in most states, Queensland investor lending was by far the strongest at 13.6 per cent month-on-month, driven by lending for the purchase of existing dwellings."

Ms Tindall from RateCity said the Australians were continuing to refinance loans to try and capitalise on lower rates, with some fixed options now garnering deals as low as 1.59 per cent.

"Lockdowns have been particularly successful in encouraging people to refinance," she said.

"Last month, fixed rates hit a new record low of just 1.59 per cent. That's enough to drive even the most complacent borrower to at least enquire into their mortgage rate."

Ms Tindall noted the level of first home buyer loans was dropping and this was likely due to house prices now outstripping borrowing capacity.

"First home buyers are dropping like flies and that's a concern," she said. "They had a good run throughout 2020 but many are now finding the market has surged well beyond their borrowing capacity."