The ASX bank share sector is suffering a tough end to the week, with the major ASX financial shares down more than 1% even though the S&P/ASX 200 Index (ASX: XJO) is only down by 0.9%.

Let's look at the pain across the sector.

The Commonwealth Bank of Australia (ASX: CBA) share price is down 1.4%.

The National Australian Bank Ltd (ASX: NAB) share price is down 2.2%.

The Westpac Banking Corp (ASX: WBC) share price is down 1.3%.

The ANZ Group Holdings Ltd (ASX: ANZ) share price is down 1.3%.

The Bank of Queensland Ltd (ASX: BOQ) share price is down 1.3%.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is down 1.1%.

The MyState Ltd (ASX: MYS) share price is down 1.3%.

Ouch.

A decline of more than 1% today is intriguing considering some of the latest loan statistics have been released from the Australian Bureau of Statistics (ABS) which showed mixed numbers.

Investor loans have soared

The ABS' latest stats are for the monthly update for September 2024, which may be affecting ASX bank shares.

ABS reported that the total value of new housing loans fell 0.3% in the month of September to $30.2 billion after seven consecutive rises. Declines are probably not what most investors want to see.

For the month of September 2024, investor loans declined 1% month over month to $11.6 billion. However, compared to September 2023, the investor loan figure was up 29.5% year over year. It was only slightly below the record high of January 2022.

The value of owner-occupier loans rose 0.1% over the month of September 2024 to $18.6 billion, which was 13.1% higher than September 2023.

Owner occupier first home buyer loans fell 3.3% over the month of September 2024 to $5.2 billion, which was 8.8% higher than September 2023.

Falling house prices

Another reason for the ASX bank share decline may be due to a weakening sentiment in the housing market. The real estate market is a key element of banks' operations and profitability.

The latest Corelogic data was released today. It showed that over the month of October 2024, Sydney home prices were down 0.1%, and Melbourne home prices were down 0.2%. While Brisbane, Adelaide, Perth and Hobart continued with solid rises, Australia's biggest cities have the biggest impact on banks' loan books due to their larger populations.

But, Corelogic said the mid-sized capital are also losing momentum.

Sydney going into negative territory may worry investors if it's increasing the risk of future bad debts with loans. It was the first monthly fall for Sydney since January 2023, according to Corelogic.

Slower growth in home values have also been accompanied by a rise in home listing levels.

Macquarie Group Ltd (ASX: MQG) result

Investors should also keep in mind that Macquarie reported its FY25 half-year result today, which is the latest insight investors have into the banking sector thanks to Macquarie's banking and financial services (BFS) segment.

Macquarie reported its home loan portfolio reached $129.9 billion at 30 September 2024, up 9% from 31 March 2024. It now has a market share of approximately 5.6% of the Australian market. It's seemingly taking market share from other ASX bank shares.

However, Macquarie also noted that its BFS division experienced "margin compression". Bank investors don't really want to see profit margins shrink because it suggests reduced profitability and increased competition in the sector. That could be problematic for all ASX bank shares if it hurts collective profits.