First-time buyers surge as investors retreat, boosted by government-backed loan scheme

Mortgage broker Loan Market says first-home buyer loan applications jumped 10% in the first half of August after a 3% fall in July, making them the only group posting growth since June. Investor loan numbers kept sliding, down 8.6% on a seasonally adjusted basis, while overall home-loan demand was down 5.4% from the previous quarter, according to the Australian Bureau of Statistics. The trend follows three interest-rate hikes and Labor’s abolition of negative gearing for most investment purchases, a reform the prime minister said was meant to level the playing field for newcomers.

The government’s 5% deposit scheme, expanded and stripped of income caps in October 2025, lets buyers borrow up to 95% of a home’s value and removes lenders’ mortgage insurance, saving participants an average of over $15,000. Prices have fallen nationwide, yet properties within the scheme’s caps have declined more slowly, concentrating buyer interest in those price bands. Industry voices, including 13x chief executive Peter Esho, warn that this pent-up demand could keep the market buoyant for several years.