New figures have revealed that a sizeable slice of the federal government’s 5 per cent deposit guarantee is now flowing to high‑income households.
Data prepared by Housing Australia for Senate estimates has shown that the expanded 5 per cent Deposit Scheme backed almost 40,000 loans between 1 October – when income caps were removed – and 30 April.
Over that seven‑month window, the guarantee supported 15,924 single‑borrower loans and 23,790 joint‑borrower loans.
Of the 39,704 guaranteed loans written after October, 13,979 went to buyers earning more than the income limits that previously applied – 6,812 single borrowers with incomes above $125,000 and 7,167 couples with combined incomes above $200,000.
At the very top of the distribution, nearly 1,000 singles on salaries of $200,000 or more and 1,251 couples earning at least $275,000 accessed the program.
This marks a shift away from the scheme’s original positioning as targeted help for lower‑income first home buyers (FHB).
Take‑up is now so broad that the guarantee has become the dominant path for FHBs into the market.
On average, the scheme supported 5,670 loans a month over the period.
Across the same months, Australian Bureau of Statistics (ABS) data showed FHBs as a whole taking out 10,181 loans a month, meaning that a majority of first home purchasers are now using the 5 per cent Deposit Scheme.
Despite the increase in scheme usage, the overall number of FHB loans has barely budged.
In the six months before October, there were about 9,900 FHB loans a month on average – in the six months after, that rose by less than 3 per cent.
The numbers suggest the scheme has primarily reshaped how FHBs structure their finance, rather than bringing a large new cohort into ownership.
‘Helps buyers borrow more, not more buyers in,’ says economist
Independent economist Saul Eslake said the new figures confirmed his concern that the expanded scheme was largely being used by households who would have purchased regardless while allowing them to take on bigger loans.
In his view, the decision to remove income caps in 2025 was emblematic of a broader pattern in housing policy.
“The way it was expanded by Albanese goes to the heart of why we have the housing problems that we have,” Eslake said.
He said that policies that loosen borrowing constraints tend to fuel higher prices and larger debts rather than delivering affordability gains.
“Whenever governments do things that allow people to spend more on housing than they would have otherwise, they end up spending more on housing,” he said.
Housing Australia revealed in late March that more than 300,000 Australians had bought or built a home with support from the 5 per cent Deposit Scheme.
FHB demand eases
The fresh figures come after a dip in FHB demand, with new data from Aussie Home Loans and Loan Market Group (LMG) – two of the country’s largest broker networks – showing double‑digit declines in FHB activity since the federal budget.
“Since the announcement on May 12, first home buyer lodgements have declined more than 20 per cent,” Sebastian Watkins, CEO of Lendi Group, 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.
New data from Equifax has further shown FHB mortgage growth swinging from solid expansion at the beginning of the year to a broad‑based contraction in May.
New mortgages for FHBs were up 7.1 per cent in January, yet have since recorded a 9.1 per cent fall in May.
[Related: FHB pullback almost as steep as investor retreat]
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