Investors borrowed $1.02 billion last month, down from $1.24 billion in August 2018, according to the latest Reserve Bank figures.
The drop comes despite the loosening of LVR speed limits for owner-occupiers and investors at the start of the year.
CoreLogic senior property economist Kelvin Davidson said the investor figures were "pretty soft", with only 1% of lending to investors going to those with less than a 30% deposit.
"This hints at a restraint from the speed limit, and hence could be a key group that would benefit from a potential loosening of the LVR rules in November," Davidson added.
Overall mortgage lending was flat last month. Borrowing reached $5.38 billion, slightly down from $5.4 billion in August last year.
First home buyer borrowing grew to $923 million last month, up from $833 million last August.
Owner occupier lending grew from $3.2 billion last August to $3.38 billion last month.
Despite the flat figures, Davidson believes low rates and loosening serviceability tests could provide a short-term boost to the market.
Davidson believes banks have begun to "loosen their internal 7%-8% serviceability tests" over the past month.