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Anticipated interest rate reductions may soon alter mortgage financing dynamics in Australia, with Equifax data suggesting a possible resurgence in first home buyer (FHB) activity and sustained momentum in refinancing.
Equifax reported that overall FHB demand has fallen -6.6% year-to-date (YTD) compared to 2024, with the key 26–35 age group seeing a -7.2% decline.
In contrast, refinancing demand has grown 8% year-on-year as homeowners seek improved loan conditions amid rising costs. Despite subdued first home buyer activity, Equifax projects a potential turnaround, estimating up to 3% growth in the second half of 2025 compared to the same period last year.
Equifax attributes this potential recovery to expected cuts in the cash rate, which could improve affordability and restore confidence, particularly among younger buyers balancing family and financial responsibilities.
According to Equifax’s modelling, a forecast rate cut in July—either 25 or 50 basis points—could drive a 14% increase in new mortgage enquiries and a 16% rise in refinancing within three months.
“That tells us the market is responsive, and First Home Buyers are likely to follow that trend as confidence improves,” said Moses Samaha, executive general manager at Equifax.
The company noted that refinancing activity, already elevated, is expected to continue. Enquiries for refinancing made up 36.2% of mortgage demand in May. Among sole traders and SMEs, this figure climbs to 48%, reflecting the financial pressures many businesses face and the need to manage personal finances accordingly.
Investor participation in refinancing is also notable, with Equifax data showing 40% of investor-related refinancing demand originates from New South Wales, followed by Victoria (26%) and Queensland (19%).
Indicators of borrower intent suggest growing confidence in the market. Equifax reported a 13% YTD rise in early-stage mortgage access intent, with May alone showing a 17% increase compared to a year earlier. The strongest increases came from Queensland (+19%), South Australia (+18%), and Western Australia (+15%). By age group, the 65+ bracket recorded the largest increase at 24%, followed by 18–25-year-olds at 20%.
Equifax’s data suggests that, while recent conditions have dampened activity in some mortgage segments, further cash rate reductions could drive renewed demand, particularly among buyers and borrowers seeking relief from cost pressures.
