New research has revealed government deposit schemes are massively luring younger buyers into ownership, while stretching repayments and significantly reshaping mortgage risk.
Fresh data from Equifax and the Real Estate Institute of Australia (REIA) has shown that government deposit schemes are driving a substantial surge in first home buyer (FHB) demand among younger Australians, despite pushing mortgage repayments towards half of median family income.
Equifax’s latest mortgage research has confirmed that FHB intent strengthened again in February 2026, defying the usual pattern where a cash rate increase cooled demand in entry‑level categories.
The figures showed that inquiries from would‑be FHBs aged 18–25 grew 9.87 per cent year on year in February, while inquiries from the 26–35 cohort rose 3 per cent over the same period, despite the Reserve Bank lifting the cash rate to 3.85 per cent that month.
Equifax executive general manager Moses Samaha said the data underlined how determined younger Australians were to secure a foothold in the housing market.
“Young Australians are proving remarkably resilient, even in a tightening rate environment, they are seemingly undeterred in their push to enter the market,” Samaha said.
Samaha said that the key reason demand had spiked was due to the federal government’s First Home Buyer Deposit Scheme offsetting the immediate impact of higher rates by lowering upfront savings hurdles.
“I think it’s clear that the government’s First Home Buyer Deposit Scheme continues to be a driver of First Home Buyer activity, almost insulating FHBs from the immediate chill of rate hikes,” he said.
He drew a sharp contrast between younger buyers – who were still racing to enter the market and more established borrowers who were bracing for higher repayments – stating that the current environment had created a clear split between generations.
“While a rate change tomorrow may trigger a refinancing rush for existing owners, it is clearly not yet deterring the next generation of buyers,” he said.
Deposit support widens access, yet deepens repayment burden
REIA’s December 2025 Housing Affordability Report captured the flip side of the story and showed that the expansion of the 5 per cent Deposit Scheme had simultaneously brought more FHBs into the market, yet pushed up the share of income needed to service a typical mortgage.
The institute reported that national housing affordability deteriorated over the December quarter.
The REIA attributed this to FHB participation lifting following the significant expansion of the scheme in late 2025, with average loan sizes and repayment burdens edging higher.
REIA president Jacob Caine acknowledged that the policy had opened the door for more households to transition from renting into home ownership.
Yet he cautioned that this easier pathway had come at the cost of larger debts relative to income, with many new buyers stretching further on loan size than they otherwise could have without the government guarantee.
“The consequence has been that many new buyers have been able to commit to larger loans under the scheme, which has increased the proportion of household income required to service a mortgage,” he said.
According to the report, average loan repayments now account for 49.2 per cent of median family income, representing a 2.2-percentage-point deterioration in affordability over the quarter.
The REIA noted that affordability had declined in every state and territory in the final quarter of 2025, with falls ranging from 1.1 percentage points in the ACT to 3 percentage points in Western Australia.
An above‑average influx of FHBs was also recorded over the period, coinciding with the reduced deposit requirement taking effect.
Caine stressed that while lower‑deposit schemes were proving effective at unlocking demand, they could not on their own deliver a sustainable improvement in housing affordability without matching progress on supply.
“Reducing the deposit hurdle is helping more Australians achieve home ownership. But policies that stimulate demand must be considered alongside the broader housing affordability picture,” he said.
Older Australians at the front of the refinance queue
Equifax’s figures also show that older Australians were increasingly focused on reshaping existing debts as higher rates bite into household budgets.
In February 2026, refinancing inquiries from borrowers aged 55 and over were up 12 per cent yoy, with enquiries from the 46–55 cohort rising 8 per cent, making these the fastest‑growing age brackets for refinance activity.
Samaha said the data revealed that the strongest growth in refinancing was now coming from borrowers who were at or approaching traditional pre‑retirement ages.
He added that this was not an isolated blip, but rather the continuation of a trend that was gradually locking in longer mortgage horizons.
“We’ve been watching this trend for a while, but it’s starting to really cement that Australian mortgages are stretching further into later life,” he said.
Samaha also contrasted the latest results with those from earlier in the year, noting that the centre of gravity for refinancing demand had moved steadily up the age scale.
“Last month, the 46–55 cohort showed the most growth, this month, that pressure has moved even further up the age scale to the over-55s,” he said.
Pulling the threads together, he said the current rate environment was prompting borrowers of all ages to reassess their loan structures and reiterated that substantial debt sizes among older cohorts were particularly concerning.
“Mortgages are not just the young families’ burden, pre-retirees and Gen X are actively carrying and refinancing debt deep into 2026,” Samaha said.
[Related: Home Guarantee expansion fuels low-deposit lending surge]
