Mortgage demand has hit a three-year record high fuelled by interest rate cuts, first homebuyer incentives, and rising rents.
The Equifax Consumer Market Pulse for December shows demand for home loans jumped 18 per cent compared to the same time last year — the biggest surge for the month since 2022.
The big four banks attracted the most new mortgage enquiries, while refinance enquiries made up more than a third of total mortgage demand.
Queensland, Western Australia, and New South Wales had the strongest growth in demand in December for mortgage growth.
First homebuyer incentives, rising rents and rate cuts are fuelling a surge in mortgage demand. Image: iStock.
Equifax chief solution officer Kevin James said the rise in mortgage demand was heavily influenced by both the expanded First Home Buyer deposit scheme and the three cash rate cuts last year.
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“The momentum shows first homebuyers rushing to utilise the deposit scheme, however this trend will likely be sensitive to the cash rate in 2026,” Mr James said.
“If rates hold or drop, we could expect this energy to carry well into 2026, however, any rate hikes could see this stalled.
More than a third of mortgage enquiries last month were for refinancing, Equifax data has found. Picture: Jake Nowakowski.
“With 36 per cent of all mortgage demand in December 2025 driven by refinancing, it is a good indication that existing borrowers are aggressively hunting for value. This activity could suggest that mortgage holders are acting now to protect themselves against any potential cash rate uncertainty as we move further into 2026.”
Demand for personal loans and credit cards is also at a three-year peak, according to Equifax.
“With demand (for personal loans) up 10.4 per cent year-on-year, alongside a significant 15.3 per cent surge in credit card enquiries, it’s clear that Australian households were actively seeking credit to manage the holiday season,” Mr James said.
“This isn’t just about accessing new funds — it represents a deeper consumer reliance on credit.”
Equifax chief solutions officer, Kevin James. Image supplied.
Mr James said banking transaction data comparing October 2025 to October 2024 revealed the average amount spent on credit card payments jumped 35 per cent.
“To me, this signals that consumers aren’t just opening these accounts for a rainy day, they are leaning on credit to bridge gaps in their daily cash flow.”
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Home Loan Experts mortgage broker Sheng Ye said rising rents were also pushing many Australians to “seriously consider buying sooner” than planned.
“Rental increases are forcing people out of their preferred suburbs and into areas farther from the city,” Mr Ye said.
“In many cases, renters are asking whether buying — even if it’s farther out — might be the better long-term option.”
Mortgage demand hit a three-year peak in December 2025, according to Equifax. Picture: Gaye Gerard.
Mr Ye said he did not expect the Reserve Bank to cut or raise rates in the first half of the year.
“The RBA is very aware of cost-of-living pressures,” he said. “Increasing rates further would add to mortgage stress and risk public and political backlash.
“The most likely outcome is that rates stay where they are for longer while the Reserve Bank monitors economic conditions.”
The RBA holds its next board meeting on February 3.
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