The Australian Finance Group's Mortgage Index for the final quarter of the 2016/17 financial year shows the non-major banks now have a 35 per cent share of the market.David Bailey, AFG's chief executive officer, said the increased flows of business to the non-major lenders was, in part, due to "significant structural change to the lending market, brought about by tighter lending rules." A series of rate rises and policy changes has also had an impact on the investment market. "In what will no doubt be welcome news for the regulator, investment lending has dropped to 31 per cent of our total lending for the quarter as lenders continue to tighten their criteria," said Mr Bailey.Refinancing figures are also down from 35 per cent to 29 per cent as refinance options for borrowers with interest-only or higher LVR investment loans decrease and others choose to stay put until the market settles. Lender policy restrictions have also seen the average loan size fall in every state apart from Queensland."The part of the market that has been virtually untouched by regulators and lenders is the principle and interest owner category. As a result, those opting to upgrade their homes have increased from 34 per cent to 39 per cent in response to some attractive lending offers," Bailey concluded.In a sign that homeowners are picking the bottom of the market for interest rates, the proportion of borrowers tracked by the AFG index who are choosing to fix their rate has jumped significantly to finish the quarter at 23.7 per cent.And AFG's themes are being applauded by Cameron Kusher, CoreLogic's research analyst, who noted that, with a new round of macroprudential policies announced at the end of March this year, "it's likely there will be a similar, if not more pronounced slowdown in investment activity across the housing market.""Coupled with affordability constraints and higher mortgage rates, we expect the 2017/18 financial year will record a less substantial rate of capital gains that what was seen in 2016/17."