Property News
Falling prices were meant to bring first home buyers back. They have not. Equifax's September Consumer Market Pulse, released on 13 October, shows first home buyer mortgage applications fell 22.1 per cent year on year, the sharpest annual drop since December 2022, even as the average loan for this group sits at a record $743,000.
Whether you are buying in a capital city or a regional centre, the data describes a squeeze we see in client files every week: smaller buyer pools, bigger debts, and a growing reliance on creative ways to get over the line.
Total mortgage demand fell 19.2 per cent year on year in September, the sixth consecutive monthly decline and the weakest result since October 2022. First home buyers were hit hardest. Applications from 18 to 25-year-olds dropped 25 per cent, and those from 26 to 35-year-olds fell 22.5 per cent.
Refinancing activity softened too. Lender switching fell 8.8 per cent and refinancing with an existing lender dropped 28 per cent, a sign that many existing borrowers are staying put rather than shopping around.
Equifax's Kevin James attributed the slump to strict regulatory serviceability assessments, high interest rates and cost-of-living pressure, noting that these appear to be holding borrowers in place even as property values ease.
It looks contradictory until you consider who can still borrow. Primara Research's analysis of ABS lending indicators puts the average first home buyer loan at $610,063 in June 2026, roughly $49,800 higher than before the October 2025 expansion of the 5% Deposit Scheme. Seasonally adjusted first home buyer loan counts are down 2.3 per cent on the pre-scheme quarter and remain almost 40 per cent below the June 2009 peak of 50,097.
The different averages reflect different measures and periods, so they should not be compared directly. The common thread is the direction: the buyers who do qualify are borrowing more, while those who sit just below the serviceability line are dropping out. Four rate rises since October 2025 have, by Primara's estimate, absorbed more than a third of the upfront benefit of the deposit scheme.
| Measure | Figure | Source |
|---|---|---|
| FHB mortgage applications, Sept 2026, year on year | -22.1% | Equifax |
| Total mortgage demand, Sept 2026, year on year | -19.2% | Equifax |
| Average FHB mortgage | $743,000 (record) | Equifax |
| Average FHB loan, June 2026 | $610,063 | Primara Research, ABS data |
| FHB lending, June quarter | $18.4 billion (30.4% of owner occupier lending) | Cotality |
| Investor lending, June quarter | -10.2% | Cotality |
The Commonwealth Bank's 16 October release shows apartments and units made up 44 per cent of first home purchases in 2025-26, up from 32 per cent five years earlier, while houses fell to 55 per cent. Regional purchases rose from 20 to 23 per cent. About 56 per cent of aspiring owners are now buying with a partner, friend or family member.
NAB reported last year that joint loans between friends or family who are not in a relationship rose more than 33 per cent in a 12-month period. Co-buying is no longer a niche strategy. It is becoming the default route for people on a single income who are priced out of buying alone.
In most capitals, a new detached house on the city fringe is now a stretch for singles and couples on modest incomes. That is why we are fielding more enquiries about townhouses, villas and units closer in, older established homes in outer suburbs, and purchases in regional centres, which the CBA figures show rising from 20 to 23 per cent of first home purchases. Where values are falling, vendors are more flexible. Sydney, for example, was down 1.4 per cent in September and 7.0 per cent over the year according to Cotality. Even so, for most first home buyers the constraint is borrowing capacity, not asking prices.
Rate watch: The RBA board meets on Melbourne Cup Day, 3 November, after the September quarter CPI release on 28 October. A further rise would trim borrowing capacity again, so pre-approvals are worth refreshing before you bid.
Run your numbers through the Mankin Finance Rate Check to see how your current or planned loan compares with the market.
Prices have eased, but four rate rises since October 2025 have cut borrowing capacity by roughly $90,000 according to Cotality, and lenders assess every applicant against a serviceability buffer above the actual rate. Equifax's Kevin James pointed to strict serviceability assessments, high rates and cost-of-living pressure as the main drivers. A cheaper property does not help if the maximum loan has fallen faster than the price.
For many buyers it still is. The scheme lets eligible first home buyers purchase with as little as a 5% deposit without paying lenders mortgage insurance, subject to property price caps and lender policy. The trade-off is a larger loan at a higher rate than before, so the repayment test matters more than the deposit. A broker can compare a 5% deposit structure against waiting and saving, using your actual income and expenses.
It can lift borrowing capacity because two or more incomes are assessed, and it spreads the deposit. CBA reports about 56% of aspiring owners are buying with a partner, friend or family member. The risks are legal and practical: you need a co-ownership agreement covering exit, contributions and what happens if one person cannot meet repayments. Lenders also assess each borrower's liabilities, so we map this out before you make an offer.
Disclaimer: This article is general information only and does not constitute financial, mortgage, or credit advice. Figures are drawn from Equifax, Cotality, Primara Research (using ABS data) and the Commonwealth Bank and are accurate as at the date of publication. Before making any decisions about buying or borrowing, speak with a qualified mortgage broker or financial adviser who can assess your individual circumstances. Mankin Finance Pty Ltd holds Australian Credit Licence 389087.
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