Australia’s housing market is showing renewed optimism, with a notable lift in refinancing, investor lending, and first-home buyer activity, according to Mortgage Choice’s March quarter Home Loan Report for FY25.
The Mortgage Choice report revealed that a drop in home loan interest rates has buoyed buyer sentiment, with 33% of survey respondents saying current interest rates made them more confident to purchase – up from 23% last quarter and up 20% year-on-year.
“Inflation has reduced from its previous highs, and home loan interest rates have started to fall,” said Mortgage Choice CEO Anthony Waldron (pictured). “It has been a year since the release of the first Mortgage Choice Home Loan Report and the market has changed significantly in that time.”
Boosted by this confidence, the national average loan size rose 8.1% over the March quarter to $628,684.
The report recorded a strong surge in refinancing, with the value of refinance loans climbing 30% year-on-year. SA/NT led the country, with a 44.3% annual rise in refinancing value.
“It’s unsurprising that refinance activity continues to grow given the Reserve Bank delivered a 25-basis point cut to the cash rate in February,” Waldron said. “If the RBA lowers the cash rate again at its May board meeting, we’re likely to see refinancing activity continue into the June quarter.”
Investor activity also surged, with investment loan values up 18.5% year-on-year. SA/NT led the charge with a 39% rise, while NSW/ACT and QLD saw growth of nearly 25% and 24% respectively.
This aligns with recent Equifax analysis showing that refinancing reached a 12-month high and investor demand is strengthening, particularly as housing prices continue to climb.
Additionally, competitive pressure among lenders is intensifying, with several slashing rates to attract borrowers amid growing demand – contributing to a surge in loan activity across multiple segments, according to PEXA.
With national home prices up nearly 50% over five years, entering the property market remains a challenge – particularly for younger Australians.
The Mortgage Choice report found that over one-fifth (22%) of Gen Z respondents used a cash gift from family to fund their deposit, while 25% used the First Home Guarantee Scheme and nearly 30% accessed the First Home Super Saver scheme.
“Our brokers tell us that many first-home buyers can’t afford to buy in Sydney without a cash gift, and those gifts range in value from $10,000 to as much as $500,000,” Waldron said.
The trend of younger buyers relying on the Bank of Mum and Dad highlighted ongoing affordability pressures, despite improved housing sentiment.
New Mozo research showed a shift in how this support is offered in 2025 – with parents increasingly providing funds as outright gifts rather than loans.
The Mortgage Choice report also noted that 21% of buyers who already owned property planned to tap into their home equity to fund their next purchase.
“Homeowners who’ve been steadily paying off their home loan and benefitted from property price growth may have built up considerable amounts of equity that they can tap into to renovate, upgrade their home or purchase an investment property,” Waldron said.
The combination of easing inflation and falling interest rates is providing relief to households.
Compared to last year, fewer borrowers are cutting back on essentials or dipping into savings to meet mortgage obligations. Many are also becoming more proactive: 74% of borrowers are reviewing their home loan at least annually, and 60% are putting more funds into their offset accounts.
“It’s great to see that most borrowers aren’t taking a ‘set and forget’ approach,” Waldron said. “With home loan interest rates expected to fall further over 2025, I’d encourage borrowers who haven’t reviewed their home loan in more than a year to chat to their broker.”
WA continues to lead in average loan size growth, despite having the lowest average loan size nationwide at $555,806. NSW/ACT maintains the highest average at $728,557, up 8.8% annually.
Mortgage Choice reported an enduring aspiration for homeownership, with more than half of respondents who don’t currently own a home saying they would put a hypothetical $100,000 windfall toward buying their first property or investing.
“Property isn’t just an asset class, young Australians see it as their path towards financial security for themselves and their families,” Waldron said.
