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FHBs won’t be deterred by rate hike after mortgage activity spikes
A new report has shown that first home buyer (FHB) mortgage activity surged in the wake of the government extending its 5 per cent deposit scheme, as prospective home owners seek to enter the market.
LMG’s report showed that, in October, first home buyer lodgements rose 49 per cent above the average of the previous six months and increased 41 per cent month-on-month.
In the last quarter of 2025, FHB lodgements recorded the largest increase on record, rising 26 per cent quarter on quarter.
The data also showed that, after the immediate October spike, activity slowed in November, before reaccelerating into year-end.
Despite the drop in activity, FHB lodgements for December were still 17 per cent above levels seen in the 6 months prior to the deposit scheme’s expansion.
Richard Brown, Mortgage Choice principal and broker, said that the Reserve Bank of Australia’s (RBA’s) recent rate hike was unlikely to stem FHB activity, given that it historically took two increases for buyers to feel the sting.
“In short, I think it'll spur a lot of conversation, and people will become aware of rates and the possibility of them rising more,” Brown told SPI.
“However, I don't think one rate increase is going to significantly curb the first buyer demand.”
Qld leads FHB mortgage activity
Queensland led the nation for FHB lodgements, recording a 37.0 per cent increase in Q4 compared to previous quarters, and a 61.9 per cent rise month-on-month.
NSW followed with a quarterly rise of 33.2 per cent in FHB lodgements and a monthly spike of 53.7 per cent.
In Q4, Western Australia and South Australia recorded surges of 21.3 per cent and 29.2 per cent respectively, while Victoria saw the lowest spike in FHB activity with 11.7 per cent growth.
Despite the weaker result, the Garden State continued to have the highest amount of FHB mortgage activity overall.
Investor surge could soften after September rise
According to LMG, investor lodgements peaked in September but have since plateaued, with demand likely to soften in light of the rate rise.
Brown said he had seen notable investor mortgage activity in October, suggesting that they were trying to get ahead of FHB and the 5 per cent deposit advantage.
“They were trying to front-run that and get the properties in the bracket that were available because they knew the prices were only going to go up,” he said.
“Demand was going to increase for all the properties under the cap. There was definitely a surge, and you could see it from a number of different aspects.”