First‑time buyers made a sharp comeback in late 2025, yet economists have warned that larger loans could put fresh pressures on borrowers.
First home buyer (FHB) activity rose strongly in the December quarter of 2025, with new Australian Bureau of Statistics (ABS) data released on Wednesday (11 February) showing the largest jump in loan commitments in two years as government affordability schemes spark renewed demand.
The ABS’ quarterly Lending indicators report revealed the number of owner‑occupier first home buyer loans climbed 6.8 per cent to 31,783 nationwide – the steepest quarterly rise since late 2023.
The total value of those loans jumped 15.5 per cent to $19.3 billion, outpacing growth across all other borrower groups.
On an annual basis, first home buyer lending was up 9.1 per cent in number and 22.4 per cent in value.
ABS head of finance statistics Dr Mish Tan said first home buyers had emphatically re‑entered the market after several subdued quarters.
“There was strong growth across all borrower types this quarter,” she said.
“The number of first home buyer loans rose 6.8 per cent … This was the largest rise in the number of first home buyer loans since the December quarter 2023, and their value increased by 15.5 per cent.”
Policy changes accelerate demand
The rebound coincides with two major federal government housing policies: the expansion of the 5 per cent Deposit Scheme (Home Guarantee Scheme) and the introduction of the Help to Buy shared equity program – effective from October and December 2025, respectively.
These measures widened eligibility, particularly for dual‑income households and moderate-income earners who had previously missed out.
“The [5 per cent Deposit Scheme] has increased the eligibility criteria for first home buyers, and we are seeing the early effects of this in our data,” Dr Tan said.
Dr Tan added that the average first home buyer loan size surged 8.5 per cent to $607,624, driven especially by borrowers in NSW – a record quarterly rise which she said underscored both expanded borrowing capacity and persistent price pressures.
Meanwhile, Westpac economist Neha Sharma said the data pointed to early momentum from October’s stimulus measures.
“We’re seeing the first home buyer segment respond immediately to the policy changes,” she said.
“The scale of the rise in both the number and value of loans shows the boost was not just sentiment – it translated into action.”
Sharma cautioned, however, that higher loan sizes could signal a renewed affordability strain.
“An 8.5 per cent lift in average loan size within a single quarter tells us buyers are still stretching to meet prices, even with government help,” she noted.
Mortgage Choice data shows 5 per cent Deposit Scheme fuelling FHB borrowing
Broker groups have also been reporting a surge in FHB activity. Mortgage Choice’s latest Home Loan Report, released on Wednesday (11 February), found that the value of loans submitted for first home buyers jumped 41 per cent year‑on‑year in the December quarter.
The brokerage said the figure was evidence that the government’s expanded 5 per cent Deposit Scheme was reshaping purchasing behaviour.
Buyers acting sooner – and borrowing more
According to Mortgage Choice, 28 per cent of would‑be first‑time buyers brought their purchase plans forward after the scheme’s expansion, while a further 7 per cent said they had made a purchase they hadn’t previously considered possible.
Mortgage Choice chief executive Anthony Waldron said the growth underscored the program’s influence in unlocking demand.
“Despite rising home prices, our submission data reveals that first‑time buyers were out in full force over the December quarter, with the value of loans up over 41 per cent year‑on‑year nationally,” he said.
Growth was strongest in NSW and the ACT, where loan values climbed 47.4 per cent, closely followed by Queensland at 47.2 per cent.
South Australia and the Northern Territory recorded a 40.7 per cent uplift, with Victoria and Tasmania up 34.6 per cent, and Western Australia up 25 per cent.
Waldron said the removal of income caps in the revised scheme had “opened the door to a new cohort of first home buyers” – expanding access to those previously locked out on earnings grounds.
He added that the data signalled how difficult affordability had become – even in markets long viewed as attainable.
“Seeing the average loan size rise by over $80,000 in markets that have been historically more accessible, like SA and the NT, shows just how challenging the market has become for first home buyers,” he said.
Confusion clouds strong demand
While the scheme’s influence on activity is clear, awareness is still lagging.
A quarter of surveyed buyers admitted they were unsure whether they met eligibility criteria, despite widespread publicity when the changes took effect.
Waldron said this underlined the complexity of the property landscape for first‑timers.
“Despite the buzz around the expanded 5 per cent Deposit Scheme, a quarter of prospective buyers say they don’t know if they are eligible,” he noted.
“This highlights just how important it is to get expert advice… especially if you’re navigating the property market for the first time.”
Mortgage Choice’s data also pointed to a notable increase in construction loans from October onward, suggesting the policy is stimulating new housing supply in addition to existing‑home purchases.
[Related: LMG sees record quarterly lodgements as FHB activity surges]
