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The interest rate easing cycle has helped increase lending to first home buyers, according to NAB.
Lending to first home buyers jumped 16 per cent between February and April 2025, new National Australia Bank (NAB) data showed, as lower interest rates ease housing affordability pressures.
Interest rate cuts in February and May have also benefited the broader market, with lending to all owner-occupiers up 32 per cent over the same period.
Victoria is leading the way, with first home buyer activity climbing 28 per cent, closely followed by Western Australia (up 22 per cent) and Queensland (up 21 per cent).
NAB executive for home lending, Denton Pugh, said he was seeing momentum return to the market, with more first home buyers and home buyers more broadly re-entering the market.
“That momentum could carry through winter, which is usually a quieter time with less sellers listing over the cooler months,” he said.
“Despite recent rate cuts, borrowing costs remain relatively high, limiting property value increases. Slower price increases benefit first home buyers by reducing the pressure of rapidly rising house prices.
“Lower rates are helping first home buyers, as are initiatives such as the government’s Home Guarantee Scheme, but housing affordability and supply aren’t problems we can solve quickly. There’s no silver bullet when it comes to housing – it will take business, government and communities all working together.”
What’s being done to support first home buyers?
In the run-up to the election, the Labor Party made several pledges to make it easier for prospective first home buyers to get on the property ladder.
These included a program to fast-track qualifications for 6,000 tradies to boost housing supply and help deliver on its election promise to build up to 100,000 homes exclusively for first home buyers.
The Albanese government also committed to investing $10 billion to partner with state developers and industry to build 100,000 homes for first home buyers.
Other moves announced by the Labor Party include a ban on foreign purchases of established dwellings from 1 April 2025 until 31 March 2027, expanding the Home Guarantee Scheme to all first home buyers, and plans to clamp down and reduce land banking by foreign investors to ease pressure on the housing market.
However, some broker groups and industry associations called on political parties to implement broader reforms, saying that without holistic measures, the affordability crisis could persist.
First home buyers struggling to get on the property ladder have led to a rise in ‘rentvesting’ – the concept of buying in one location and renting in another – as prospective home buyers face soaring property prices and an average 10.6-year wait to save for a deposit.
For example, in 2024, the Australian Bureau of Statistics (ABS) recorded 8,282 new home loan commitments by first home buyers for investment purposes, 12 per cent higher than in 2023.
By comparison, owner-occupier first home buyer loan commitments grew just 5 per cent over the same period.
Eventus Financial mortgage broker Alex Veljancevski has extensive experience working with first home buyers and, in March, told The Adviser that despite interest rates easing, first home buyers still face substantial challenges.
He said that lower rates could push prices even higher, as more buyers with increased borrowing power compete for limited stock.
Despite persisting pressure on home buyers, Real Estate Institute of Australia’s (REIA) Housing Affordability Report for the March 2025 quarter found that housing affordability had improved nationally for the first time in 12 months.
[Related: A fifth of Gen Z borrowing cash for home deposits]
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