First home buyer and investor loan volumes have both dropped sharply since the federal budget, with new data showing FHBs have pulled back almost as much as investors.
Fresh figures from Aussie Home Loans and Loan Market Group (LMG) – two of the country’s largest broker networks – have revealed double‑digit declines in first home buyer (FHB) and investor activity since the federal budget, alongside an early shift in demand toward newly built properties.
FHB lodgements slide almost in step with investors
Sebastian Watkins, CEO of Lendi Group, which operates Aussie Home Loans, said the weeks following the budget had brought a marked change in behaviour across both cohorts.
“Since the announcement on May 12, first home buyer lodgements have declined more than 20 per cent,” he said.
Investor demand in Aussie’s network has fallen even more abruptly, underscoring the immediate impact of the housing tax changes.
“Over the same period, investor lodgements declined more than 25 per cent indicating a much sharper pullback,” Watkins said.
Loan Market executive chairman and CEO Sam White reported similar patterns across his group’s flows, based on loan applications rather than lodgements.
“Loan Market data shows first home buyer loan applications fell by 16 per cent in June compared to the four weeks before the budget announcement,” White said.
He said that investor applications fell even more decisively in the wake of the budget’s housing package.
“Loan Market data shows investor loan applications fell by 19 per cent in June compared to the four weeks before the federal budget announcement,” he said.
Early pivot toward new‑build stock
Alongside the volume declines, both groups are seeing rising interest in newly built properties, particularly among investors.
“We’re seeing growing interest in newly built properties through our buyer’s agent business, with inquiry levels increasing as buyers explore what these changes could mean for them,” Watkins said.
“While it’s still early to say whether that will translate into a sustained shift in purchasing behaviour, there’s certainly more curiosity and engagement around new housing opportunities than we were seeing previously.”
Loan Market’s data points to a clearer structural tilt among investors toward new stock compared with a year ago.
“We have seen investors moving toward new builds. In June 2026, the ratio of investor loan applications for new versus established properties was 1:13. In June 2025, this ratio was 1:22,” White said.
Confidence hit by tax changes and macro pressures
Yet both executives said that the budget’s housing tax reforms were interacting with broader economic headwind.
“What Aussie’s data does show is a clear change in borrower behaviour following the Federal Budget announcement,” Watkins said.
He said that the government had expected the investor retreat to open space for more FHB activity – but added that this dynamic had not materialised.
“The expectation was that first home buyers would step into the gap left by investors. That’s simply not what we’re seeing,” Watkins said.
“Our view is that investor behaviour appears to have responded more directly to the policy changes, while first home buyers are behaving more like the broader market.”
White said FHB applications were already slowing before the budget, while investors had faced an additional constraint from changes in how lenders treat the new tax settings.
“First home buyer loan applications have been slowing throughout the year, which is likely due to a combination of economic factors including rising house prices earlier in the year combined with decreased borrowing capacities due to the cash rate increases,” he said.
“Investor loan applications had been decreasing prior to the federal budget, with a sharper drop-off following the announcement. Investor borrowing capacities have taken a hit this month as negative equity considerations have been removed by many lenders and many investors are taking a moment to assess the new rules.”
Structural reforms v short‑term caution
Both groups outlined the potential for the new settings to reshape the balance between investor and FHB demand over time – but said that confidence would determine whether the intended benefits flowed through.
“Structural reforms are designed to reshape the market over time, but borrower confidence can change overnight. Right now, Aussie’s data suggests many first home buyers have become more cautious, not more active,” Watkins said.
He said that conversations with clients highlighted the cumulative weight of multiple pressures.
“When our brokers speak with customers, we’re hearing three things: they’re uncertain, they’re stretched, and they’re exhausted,” he said.
“They’re navigating affordability pressures, higher living costs, elevated interest rates and ongoing economic uncertainty. Policy change has become another layer in an already challenging environment.”
White, meanwhile, said conditions could become more favourable for would‑be owner‑occupiers if price growth continued to slow and investor competition remained subdued.
“With house prices stagnating and slightly reducing in some regions, combined with less competition from investors, we may see a more appealing environment for first home buyers,” he said.
He also expects competition around new builds to intensify as both cohorts target the same stock and state‑based incentives draw more demand into that segment.
“It is likely we will see increased competition for new builds as historically these have been popular for first home buyers and some state governments offer incentives to help drive this. Now investors will be looking at these same properties as they aim to take advantage of negative gearing strategies,” White said.
[Related: Mortgage demand in ‘significant decline’]
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