Australia’s housing market continues to struggle but is still managing to fend off signs of any looming credit crunches that have cropped up in talks in recent months.

The value of investor loans, which has hit its lowest point in half a decade, received some support from a modest increase in new loans and new purchases on owner-occupied homes.

Given that the Royal Commission inquiry into financial misconduct opened a series of allegations against various companies in the financial sector, and the spotlight also fell on mortgage lending, Australia’s housing market was uncertain as to how these events would affect its total finance values over the last couple of months. They have held firm for now.

The increased scrutiny has led to the tightening of regulations, and this should have a knock-on effect on the market alongside a drop in housing prices in both Sydney and Melbourne. The out-of-cycle mortgage lending rate rises will hopefully offer a boost to both homeowners and investors and to combat the dropping levels of investor loans across the country.

The Australian Bureau of Statistics (ABS) said that the total figure for housing loans was up 0.4% in July, reaching $31.431bn. It dropped 5.1% year-on-year but improved on the June decline of 6.5% for the same yearly comparison.

One positive factor was the number of loans handed out to Australians looking to buy a home, which went up 1.3%, increasing the total value to $21.184bn. This showed some upturn compared to the previous July, which only saw an increase of 1.1%. There was only a 0.6% rise in June of this year.

When refinancing came out of the equation, however, the picture became a little different. This shows just how large a part that refinancing played in bumping up the figures, as there was a 0.5% drop in loans without it. The refinancing of loans already in place was up 5% in July.

The ABS also noted that when accounting for seasonal adjustments, the number of first-time buyers also dropped slightly in July.

The biggest decrease seen was in loans to investors, which dropped by 1.3% to $10.247bn. When assessed across 12 months, this decline reached a sizeable 15.7% drop.  This is the seventh time in eight months that Australia has seen double-digit drops on a year-to-year basis for the value of investor loans.

Henry St John, a JP Morgan Economist, suggested that the level of lending to investors “remains very weak in value terms” with increased regulatory scrutiny and “tighter lending standards” playing a part.

He said that changes to the ways that banks lend capital and the expectations of increased responsibility that comes with this meant that there was little surprise of “underperformance in investor relative to owner-occupier lending.”

The out-of-cycle mortgage rate changes should be a “clear headwind” to both sides of the table, St John said, as housing corrections begin to kick in across major cities.

Confirming that Australia expects to see “slowing in lending and refinancing behavior,” St John said that in the face of three of the four major mortgage lenders upping their rates by a minimum of 15 basis points, both investors and homeowners would likely see effects.