Australia's expanded first-home buyer deposit scheme is reshaping the mortgage market in ways that reach well beyond the youngest generation of buyers.
New analysis from Equifax, covering the six months from October 2025 to March 2026, shows first-home buyer demand at approved scheme lenders surged 16.4% compared to the prior corresponding period, while volumes at non-approved lenders fell 6.5%.
That activity sits within a broader context of strengthening mortgage demand: Equifax's Q1 2026 Consumer Market Pulse recorded a 7.5% year-on-year jump in mortgage enquiries, with average borrowing amounts on new mortgage accounts up 6.7% compared with Q1 2025.
Kevin James (pictured), chief solution officer at Equifax Australia, said the results demonstrate the direct influence policy can have on demand.
"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," James said.
The 18–25-year-old cohort recorded the sharpest increase in mortgage enquiries of any age group, rising 22.8% over the period. Historically the most constrained by deposit requirements, this group is proving highly responsive to a scheme that allows eligible buyers to enter the market without the standard 20% deposit. But the growth was not confined to the youngest buyers — those aged 26–35 grew 17.4%, and the 36–45 cohort rose 16%, suggesting the scheme is generating broad-based uptake across all buyer age groups.
James said the trend extended well beyond the youngest cohort.
"This widespread lift indicates that buyers across all age brackets are actively leveraging the policy incentive to bypass traditional deposit requirements and timelines," he said.
Affordability pressures are also changing where first-home buyers are looking. Around one-third of buyers are now casting a wider geographic net, with 81.9% of those relocating moving within their state and 7.1% crossing state borders entirely. NSW buyers are the most mobile interstate, with Victoria and Queensland the top destinations — a pattern James attributed directly to property prices in Sydney.
"Of those FHBs migrating interstate, Equifax data shows the top two migration corridors nationwide consist of NSW buyers relocating to VIC (12.2%) and QLD (10.4%), which when you look at recent property prices in NSW, is unsurprising," he said.
The scheme is also pulling demand toward smaller loan sizes. The loan size skew reflects who is entering the market — and that profile carries its own risk. Nationally, the lowest quartile of mortgage loan values grew 11.8% — outpacing high-value loans, which rose 9.3%. The gap is most pronounced in South Australia, where growth in smaller loan sizes was nearly double that of the largest loans.
Equifax data shows first-home buyers exhibit structurally higher arrears rates than non-first-home buyers nationally. That broader arrears picture offers some reassurance: Equifax's Q1 2026 data shows mortgage arrears of 90 days or more edged lower in the March quarter, both by share of active accounts and total limits.
"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.
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