First-home buyer (FHB) lending remains largely stagnant, with loan numbers rising just 0.2% in the year to June 2025 to total 123,363 loans nationwide, according to Money.com.au’s First Home Buyer Mortgage Insights report.
FHB activity is still 31.7% below its September 2021 peak, when record-low interest rates fuelled a surge in homeownership, but has recovered 7.6% from the September 2023 trough during the Reserve Bank’s rate-hike cycle.
Money.com.au property expert Debbie Hays (pictured) said the recent rebound could gain momentum following the expansion of the First Home Guarantee scheme.
“The scheme’s expansion will likely boost demand and support continued growth in the first-home buyer segment in the short term,” Hays said. “But as more first-home buyers rush to take advantage of it, competition will intensify and that could end up pushing prices higher and locking out the very group it’s meant to help.”
Queensland and Victoria were the only major states to record annual growth in total FHB lending – up 4.5% and 3.5%, respectively.
FHB owner-occupier lending recorded 1.3% annual growth to 116,280 loans, remaining 8.1% above the September 2023 low. Victoria continues to lead the country, accounting for one-third (33%) of all national FHB loans.
The state recorded 38,472 loans in the year to June 2025, up 4.6% annually, representing the largest increase in absolute terms nationwide.
“Victoria is the most accessible market for first-home buyers in the sense that it has the smallest average loan size among the Eastern states, stamp duty exemptions across property types and a large share of buyers entering through Melbourne’s outer suburbs, where new developments are affordable by today’s standards,” Hays said.
Queensland led the major states for growth rate, with FHB owner-occupier lending up 6.1% year-on-year to 22,912 loans. However, first home buyers still make up the smallest share of the owner-occupier market in Queensland at 32.1%.
In contrast, Western Australia saw the sharpest fall, down 7.5% year-on-year.
Investor participation among first-home buyers has weakened sharply, with FHB investor loans falling 14% year-on-year to 7,083 loans, the lowest level since mid-2023.
Despite the downturn, investor loans still make up 5.7% of all FHB lending, within the typical 4.8-7.1% historical range since 2021. Every state recorded an annual decline, led by Victoria (-18.5%), South Australia (-17.1%), and Queensland (-15.8%).
New South Wales remains the dominant market for FHB investors, accounting for 35.2% of all investment loans, well ahead of Victoria’s 21.8% share.
“Many first-home buyers are priced out of Sydney and parts of NSW, which means the only way to get a foot on the property ladder is to rentvest,” Hays said. “Buying where they can afford and renting where they want to live has become the most practical path into the market.”
The Mortgage Insights report also showed that the average FHB loan size rose five times faster than loan volumes. Owner-occupier loan values grew 5.2% year-on-year to $544,480, while investor loan sizes rose 4.4% to $576,437.
Western Australia led the nation for growth in FHB loan sizes, with borrowing values jumping 12.5% for owner-occupiers and 13.9% for investors – despite the state still having the smallest average loan size nationally.
“WA’s affordability advantage is shrinking fast. In inflated markets like this, rapid growth in borrowing values points to early signs of affordability strain,” Hays said.
All other states saw average loan sizes increase except Victoria, where the average FHB investor loan fell 1.5% from $544,110 to $535,992.
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