According to Loan Market, since the Federal Government’s First Home Guarantee Scheme was expanded in October:
First-home buyers across the country borrowed an average of nearly $60,000 more over the first month of the expanded scheme, a rise of about 10 per cent.
In NSW, where house prices are higher than the rest of the nation, the increase was around $120k for the average loan. Meanwhile, the average in SA grew by around $100k.
Higher total debt is not inherently a bad thing. Whilst some label the increase “alarming”, higher borrowing is precisely what the scheme is designed to unlock – i.e. get people into a home sooner with a smaller deposit.
💰Growing rents and increasing cost of living mean saving a 20% deposit is increasingly difficult, even with a good income that could otherwise pay a mortgage. With the expanded scheme, people who can otherwise safely service a largish debt don’t also need the added challenge of saving more upfront.
In that sense, there is nothing really to be afraid of (at least for First Home Buyers). And Australian Prudential Regulation Authority is making some tweaks to lending rules to further minimise risky loans from February 2026.
👎🏻The bigger problem remains that the increased demand from FHBs is not being matched by new supply within their price range. Instead of prioritising unlocking more affordable types of homes – townhouses and more greenfields – State Governments, particularly NSW Government and Victorian Government are prioritising unlocking high-cost, high-density alternatives, which for the most part, sit outside the price caps (and affordability range for most).
📈This will cause the price of any homes under the various caps to quickly run up – precisely as the house price data is showing.