First-home buyers are paying increasingly less upfront towards the purchase of properties, taking full advantage of government schemes designed to help overcome barriers to ownership.
The Reserve Bank’s latest Financial Stability Review shows an upwards shift in the number of new homeowners choosing to take out larger loans over the last six months.
It comes after high numbers of buyers flocked into the market at the back end of last year using the federal government’s First Home Guarantee.
The scheme allows eligible first-home buyers to secure a home with just a 5% deposit, while also exempting them from Lenders’ Mortgage Insurance (LMI).
“Participation in the scheme has been strong,” the Reserve Bank said. “Since October 2025, when the scheme first came into effect, the share of high Loan-to-Value Ratio (LVR) borrowing has increased.”
The number of first-home buyers opting to secure a home loan with an LVR under or at 80, where LMI is generally triggered, has dropped notably in the last six months.
Source: RBA
Instead, buyers have been choosing to jump on the property ladder sooner, even as inflation in Australia continues to tick upwards.
Since last October, the Reserve Bank pushed through the first cash rate increase in more than two years. It then followed up with another rise of 0.25 percentage points this month, bringing the cash rate to 4.10%.
All four of the nation’s big banks, which are lenders to around three quarters of Aussie mortgage holders, passed the two rate rises on to customers.
With interest rates and cost of living under even more pressure as inflation rises, the Reserve Bank used the review to point out highly-leveraged householders with high LVRs are more vulnerable to market shocks.
The average home loan size for a first-home buyer in Australia was sitting at a record high of $607,000 according to the Australian Bureau of Statistics’ 2025 December quarter data.
Minimum repayments on a mortgage of that size are around $3900 per month (assuming a 25-year term and an interest rate of 6.01%).
A further rate rise in May, as widely expected by markets, would add around $100 a month to repayments.
Despite this, the Reserve Bank said the share of high LVR lending “remains low overall” and that first-home buyers have “historically tended to experience more favourable labour market outcomes than other borrowers”.
This article first appeared on Mortgage Choice and has been republished with permission.
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