Most first-home buyers are now using the federal government's 5% deposit scheme, and new figures show a significant share of them earn well above the income limits that used to apply.
Housing Australia data prepared for Senate estimates, obtained by Guardian Australia, shows the scheme backed 39,704 loans between 1 October and 30 April — the period since Labor removed the scheme's income caps of $125,000 for single borrowers and $200,000 for joint borrowers. One in three new participants over that period earned above the old caps.
Of those loans, 13,979 went to borrowers who would have exceeded the previous limits: 6,812 single borrowers earning above $125,000 and 7,167 joint borrowers earning above $200,000. At the top end, nearly 1,000 single borrowers earned $200,000 or more, and 1,251 couples had combined incomes of $275,000 or above.
The scheme lets eligible buyers borrow up to 95% of a property's value with a government guarantee, waiving lenders' mortgage insurance. The income cap wasn't the only limit removed — the same October reform also scrapped the scheme's annual cap on the number of available places, which had previously restricted how many guarantees could be issued each year, meaning uptake is no longer constrained by a yearly quota.
Policy Institute Australia chief executive Amy Auster (pictured left) said the removal of the caps meant support now flows more broadly than intended, noting "government support traditionally goes to the people who need it the most."
Independent economist Saul Eslake (pictured right) said the scheme has likely been used heavily by buyers who would have purchased regardless, arguing that policies which let people spend more on housing simply lead to people spending more on housing — inflating debt rather than expanding genuine access.
That concern isn't shared by everyone in Canberra: RBA governor Michele Bullock has told the Senate Economics Legislation Committee she has no concerns the scheme is "threatening financial stability", even while acknowledging a lift in first-home buyer credit and loan-to-value ratios.
Whatever the RBA's read on financial stability, the mechanics of the scheme show how much extra buying power is now in play: a buyer with $50,000 in savings would typically borrow $200,000 under a standard 20% deposit, but up to $1 million under the scheme's 5% deposit terms.
Labor also lifted the scheme's property price caps last year, to $1.5 million in NSW cities, $1 million in south-east Queensland, $950,000 in Melbourne and Geelong, $900,000 in Adelaide, $850,000 in Perth, and $700,000 in Hobart.
Cotality data shows homes below those thresholds rose in value more slowly than pricier homes before the expansion, then reversed sharply once the caps lifted.
Despite the surge in scheme use, ABS figures show total first-home buyer lending rose less than 3% over the same period, suggesting the scheme has shifted existing buyers toward government backing rather than meaningfully growing overall home ownership.
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