New figures have revealed a sharp lift in first home buyer inquiries as younger cohorts rush to use the uncapped 5 per cent deposit guarantee.
Consumer credit reporting agency Equifax has found that the federal government’s expanded 5 per cent Deposit Scheme has triggered a major shift in who is entering the market, where they are buying, and which lenders are winning first home buyer (FHB) business.
Equifax, which tracks mortgage inquiries across major banks and non‑bank lenders, has examined applications from FHBs between October 2025 and March 2026 and compared them with the same six‑month window a year earlier, capturing the first phase of the federal government’s expanded 5 per cent Deposit Scheme.
Young buyers pile in after deposit rule change
Inquiries from 18‑ to 25‑year‑old first home buyers rose by 22.8 per cent over the period – the fastest‑growing age group in Equifax’s analysis.
Equifax noted that this age band had long been the group most hemmed in by the need to accumulate a substantial deposit, adding that the statistics showed that once that hurdle was lowered, younger households would in turn respond.
Yet the response is not confined to Gen Z buyers, with requests for credit from first‑timers aged 26–35 rising by 17.4 per cent, while those aged 36–45 increased by 16 per cent.
Equifax chief solutions officer Kevin James said higher mortgage rates often lead commentators to assume the market would stall but reiterated that this view ignored several other influences.
“Rising mortgage rates often inevitably lead to discussions about a cooling housing market, but affordability is just one factor in the broader demand, supply and price story,” James said.
“While demand is often driven by demographics or population growth, government policies can also have a significant effect – which is exactly what we are seeing six months into the expansion of the First Home Buyers 5% Deposit Scheme.”
Scheme panel banks pick up share
The figures also showed that, in the six months after the expansion, first home inquiries lodged with lenders participating in the 5 per cent scheme rose by 16.4 per cent compared with the previous year.
Over the same period, lenders that are not on the approved list saw first home inquiries fall by 6.5 per cent.
Buyers move further afield to make the numbers work
Affordability pressures are also showing up noticeably in the way FHBs are choosing locations, with Equifax estimating that roughly one in three FHBs are looking beyond their current suburb to secure a property.
Among those who widened their search, 81.9 per cent shifted to another suburb within their own state, 10 per cent moved but stayed within the same suburb, and 7.1 per cent crossed state borders.
Equifax reported that the two biggest corridors for first home movers are NSW residents relocating to Victoria, which accounts for 12.2 per cent of interstate first home relocations, and NSW residents heading to Queensland, at 10.4 per cent.
Younger buyers are also gaining ground in popular regional centres and coastal markets.
The data showed a lift in the share of under‑35s purchasing in lifestyle destinations, such as the Sunshine Coast, Gold Coast, and Cairns.
Meanwhile, regional hubs, including Toowoomba and the Central Coast, are seeing their strongest first home growth among purchasers aged 36–45.
Summarising the combined impact of policy and borrower preferences, James said the guarantee had lifted inquiry volumes while also altering how people thought about where they were willing to purchase.
“Equifax analysis of First Home Buyer trends shows the scheme has successfully boosted demand, while also identifying a changing mindset among potential FHBs,” he said.
“In particular, housing mobility has increased, with a good proportion of FHBs now seemingly prepared to explore outside of their local area or interstate.”
Shift towards smaller mortgages and entry‑level stock
On the loan size front, demand is skewing towards the cheaper end of the market.
Inquiries tied to loans in the lowest quarter of dollar values increased by 11.8 per cent year on year, outpacing the 9.3 per cent rise recorded for loans in the highest quarter of values.
This trend was most pronounced in South Australia, where demand for the smallest loan sizes jumped by 17 per cent, nearly twice the 8.8 per cent growth seen for the largest loans.
Higher‑risk cohort remains in focus
The bureau noted that, across the system, FHBs consistently recorded higher arrears rates than more established owner‑occupiers.
Equifax said measures of “household resilience” among first home borrowers had held up, yet James cautioned that this was a group that warranted close monitoring.
“While the household resilience of FHBs has been steady so far, this segment does appear to carry an elevated risk profile compared to non‑FHBs,” James said.
[Related: Rising rates, tax shifts cool home loan demand]
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