The Australian mortgage market recorded a strong uplift in new loan activity in FY25, driven by interest rate cuts, improved affordability, and greater first home buyer (FHB) support, according to PEXA’s latest industry report covering more than 95% of national transactions.
A total of 544,630 new property-backed loans were settled in FY25 – up 6.8% from FY24. Residential loans made up 96% of the total, far outpacing the 3.2% growth in overall property settlements.
This aligns with broader national trends, with total property settlements across NSW, Victoria, Queensland, WA, and SA reaching 722,000 in FY25 – up 3.2% year-on-year, according to PEXA.
This suggests a larger share of property buyers required financing this year, with many homebuyers relying more on loans amid tighter household budgets and stronger FHB incentives.
While Queensland recorded the highest number of total settlements in FY25, Victoria led in new mortgages, with 148,126 loans settled. Queensland followed closely at 146,157, and New South Wales recorded 142,653. Both Victoria and WA had the highest loan-attached settlement shares at 77.2%.
Loan values also surged, with $380.6 billion in new lending settled over the financial year – including $346.4 billion in residential loans, representing a 14% annual rise.
The Reserve Bank of Australia’s twin cash rate cuts in February and May helped boost household sentiment and consumption, contributing to the growth in loan settlements.
Employment conditions remained supportive, with job growth at 2.1% annually and wage growth (3.4%) outpacing inflation (2.4%) in the March quarter. This lifted real incomes and underpinned borrowing capacity.
Stable employment and income were also key factors in keeping mortgage arrears low and supporting renewed property price growth.
Refinance activity was strongest in the second half of FY25, as more borrowers sought better deals following interest rate reductions. Refinance settlements rose by 1.1% over the year to reach 401,114 nationally.
In the June 2025 quarter alone, refinances jumped 20.3% quarter-on-quarter and 20.1% year-on-year. Refinancing was especially strong in WA (+14.7%y/y), QLD (+7.5%y/y) and SA (+5.9%y/y), while VIC saw a 7.7% decline as activity normalised after earlier peaks.
The total value of refinanced loans hit a new high in the June quarter.
Commercial property loans grew faster than residential loans in FY25 – up 13.1% versus 6.6%. While demand for office space remains subdued post-COVID, the commercial lending rebound reflects broader business confidence and portfolio diversification.
NSW remained the priciest market, with the median loan in Greater Sydney at $800,000 (+5.2%y/y). However, regional NSW buyers are now borrowing more than those in Greater Melbourne, highlighting affordability challenges.
Victoria’s relatively flat house prices and rising supply helped keep loan growth modest.
Median loan values grew 4.7% in Greater Melbourne and 6.7% in regional Victoria.
Queensland saw the sharpest increases, with Greater Brisbane’s median loan rising 12.6% to $640,000, and regional Queensland up 15.1% to over $525,000.
Targeted FHB schemes and concessions remain a major driver of loan-backed purchases. These programs played a key role in states with higher proportions of loan-financed settlements, particularly in Victoria and WA, PEXA reported.
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