It's going to be massive, the pain in banking. The credit crunch is breaking for crisis.Housing prices are turning toward freefall, with discounting the only real option for vendors in a market now dictated by bargain hunters.RateCity summed up Friday morning's ABS data on housing lending for March in the worst possible terms."Investors have abandoned the real estate market with the latest ABS housing finance data showing a massive plunge in investment housing commitments, according to the seasonally adjusted figures."Today's ABS housing finance data shows investor housing commitments have fallen by 9 per cent, or $1.07 billion between February and March 2018. This is the biggest monthly drop, in percentage terms, since September 2015."Owner-occupier housing commitments have also dropped by a more modest 2 per cent, RateCity said. "The data reflects how cautious investors have become as property prices fall in Sydney and Melbourne."The latest CoreLogic figures for April show the median monthly dwelling values have dropped by 0.36 per cent in Sydney and 0.45 per cent in Melbourne.CoreLogic research analyst Cameron Kusher wrote that "the sharp month-on-month fall follows a downwards trend that has been evident across several rounds of macro prudential measures over the past few years.  This isn't really a surprise."For now any self-correcting mechanisms are overrun by the caution.There are, Kusher noted, "reports that lenders are starting to reduce the interest rate premiums on some interest only loans and investment loans."However, any reduction in rates could be offset by stricter serviceability testing on borrower expenses and incomes, as well as the prospect for renewed focus from lenders to reduce their exposure to high loan to income ratio loans."Kusher had one more restraint: banks' "reluctance to take on high loan to valuation ratio loans."Mortgage Choice CEO Susan Mitchell said: "the decline in home loan approvals and the value of dwelling commitments isn't a surprise as this correlates with what we've been seeing in the housing market at the moment."Meaning: things are as bad or worse still today in lending land.RateCity money editor Sally Tindall said the falls in property prices in Sydney and Melbourne "have investors spooked"."Nothing sends investment lending off a cliff quite like a drop in property prices."But the market may rescue itself."If history is anything to go by, they won't be out for long," Tindall said."APRA has lifted the cap on investor lending and we've already seen a marked drop in investor interest rates."Once the market smooths out you can be sure investors will be back doing the Saturday real estate rounds."