First-home buyer activity has jumped sharply as borrowers move quickly to take advantage of changes to the federal government’s 5% First Home Buyer Deposit Scheme, which removed its placement and income limits on 1 October.
The latest data from Equifax shows a clear spike in demand, particularly among borrowers targeting higher-value properties.
"In October 2025, we observed a 14% increase in FHB activity and an incredible 70% increase in demand for new first-home buyers applying for loans specifically in the $750k – $1m loan size range," said Moses Samaha (pictured), executive general manager product marketing and sales.
"This specific loan bracket appears to be policy-driven. When we overlay the surge in $750k – $1m loans against the FHB Deposit Scheme price caps, a clear trend appears.
"Once you account for a 5% deposit, the resulting property values sit squarely against the federal government’s price ceilings for most capital cities and regional centres across the country – with Sydney and large NSW regional centres being the notable exception due to their higher price cap of $1.5m."
Government figures also show the scheme is playing a larger role on the ground, with around one in ten homes sold in October supported by a government guarantee and 5,778 guarantees issued for the month, up nearly 50% year-on-year.
Broader market data from Equifax shows that overall demand for new home loans increased by 14.2% year-on-year in October, underlining the strength of recent activity. Mortgage demand rose 13.3% year-on-year in October on a trading-days-adjusted basis, with applications for the year to date running well ahead of 2024.
Citing a separate Equifax report showing a 13.3% surge in mortgage demand year-on-year in October, Kevin James, chief solution officer at Equifax, said households are showing signs of renewed confidence.
“The Equifax Monthly Consumer Pulse – October 2025 shows that consumer confidence has strengthened with households being less cautious and actively re-engaging with credit," James said.
However, Samaha cautions that the current strength in demand may be fragile.
"Despite the significant momentum in October, we expect new homeowner demand could slow down due to fading optimism for near-term rate relief, with some of the recent activity likely driven by the anticipation of rate cuts that have not, and may not, arrive – offsetting any boosts from the federal scheme ."
"We’re operating in a complex environment, we have high demand from policy-incentivised first-home buyers clashing with historically low inventory. This could put more pressure on house prices and further create affordability challenges" Samaha said.
At the same time, inflationary pressures are building again, with October CPI and trimmed-mean measures reinforcing expectations that RBA will keep rates on hold, even after three cuts earlier in 2025 helped revive confidence and borrowing.
On the refinancing front, Equifax data indicates that lenders are becoming more effective at retaining existing mortgage customers, even as borrowers continue to shop around.
"In early 2023, external switching dominated the market, accounting for nearly 60% of activity. As of October 2025, that gap has effectively closed," Samaha said.
"The split is now 51% external switching vs. 49% internal refinancing. Borrowers are still shopping around for better deals, but lenders are increasingly finding ways to keep them on the books rather than letting them walk out the door."
Refinance activity overall remained elevated, accounting for around one-third of total mortgage demand, with upgrade-related refinancing – often tied to renovations – rising solidly over both the month and the year.
Equifax’s latest figures highlight a housing and lending market being reshaped by policy incentives, shifting rate expectations and lender retention strategies:
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