Login
FHB market loses momentum as demand declines
Mortgage demand has fallen nationwide, with the first home buyer demographic hit hardest, according to recent data.
Despite demand surging around the introduction of the first home buyer scheme, rate increases, and property reforms have since dampened buyer sentiment, which has declined sharply since March 2026.
While first home buyer purchasing saw a boost from July 2025 to March following the introduction of the 5 per cent scheme, Equifax data showed that demand has since nosedived, falling by 36.3 percentage points from the December peak.
According to Equifax’s Consumer Credit Demand Data Trends – July 2026 report, mortgage demand from first-home buyers fell to -19.2 per cent year-on-year, dropping further from -17.2 per cent in June.
Of the first home buyer markets, the data showed that the younger demographics were the most significantly affected.
The data showed that buyers aged 18–25 were the most impacted cohort, with a 22.4 per cent drop in demand compared to a year ago, closely followed by a 20.9 per cent drop among those aged 26-35.
Equifax chief solution officer Kevin James said the emerging trends indicated the market was in the midst of a downswing following the surge in interest driven by the 5 per cent deposit scheme.
“This is really visible among first home buyers, where demand fell -19.2 per cent year on year, driven by steep double-digit drops among under-35s,” James said.
“The strong momentum observed late last year – when buyers actively sought to capitalise on expanded deposit scheme incentives has ended, as borrowers have likely run into affordability friction in the current economic environment.”
“We are observing a similar pullback among property investors, where demand fell 15.1 per cent year-on-year (YoY), indicating that both entry-level buyers and multi-property owners are taking a step back.”
Across the country, the state with the largest decline in mortgage demand from FHBs was Queensland, down 25.2 per cent YoY, while Western Australia declined by 19.6 per cent.
NSW dropped to 18.3 per cent below YoY, while Victoria and South Australia also fell to around 17 per cent.
The ACT saw the smallest drop comparatively over the period, reaching -14.3 per cent.
Buyers retract further
The data showed that the drop in mortgage demand was not limited to the first home buyer market, with overall demand slipping to -16.4 per cent over the past 12 months.
Equifax said that July marked the fourth consecutive month of decline in overall demand, the first time this has happened since 2023.
ACT saw the largest drop, at -19 per cent, while Western Australia was the most resilient, with demand falling to -12.9 per cent.
18-25-year-olds were once again the most significant cohort, falling to -21.1 per cent, while 26–35-year-olds followed closely behind at -20.1 per cent.
“Data indicates that the cautious borrowing behaviour observed earlier this year has broadened into a deeper credit freeze across Australian households,” he said.
“In this high interest rate environment, consumers seem to be increasingly choosing to pause major debt commitments.”
Additionally, the data showed that demand from potential investors, those with two or more mortgages, was down 15.1 per cent YoY.
Want to see more stories from trusted news sources?
Make Smart Property Investment a preferred news source on Google.
Click here to add Smart Property Investment as a preferred news source.