Victorian first-home buyers are taking on unprecedented loan sizes to get into the market after an extension to the First Home Guarantee by the Albanese government.
Victorian first-home buyers are signing up for record-breaking home loans in an Albanese-government scheme fueled response to the state’s housing affordability crisis.
Australian Bureau of Statistics figures released this week show the state’s average wannabe homeowner is taking out an unprecedented $565,867.95 loan to make their home dream a reality.
It’s more than $40,000 ahead of the same time a year ago, and up $120,000 from what they needed to borrow in March, 2020, when the Covid pandemic was first reaching Australia.
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Collectively the state’s first-home buyers borrowed a wallet-clenching $5.503bn in the first three months of this year.
In a further blow for first timers, their loans are rising at the same time as the wider state’s average loan is in decline – having dropped back $2000 from December, 2025, to $675,000 in March this year.
The statewide average had surged up $30,000 from September to December last year, but in the March quarter retreated marginally by $2000 in the first three months of the year.
The data also shows that Victoria is the nation’s first-home buyer capital with 9724 loans written to market entrants in the first three months of the year. The next biggest number was in NSW where 7443 first-home buyers took on a mortgage.
Mortgage brokers believe Melbourne-based first-home buyers are taking out even larger loans than their counterparts in regional areas.
But the number of loans being issued to first-home buyers decreased from December to March, confirming that while less first-home buyers are taking the step into homeownership, the ones who are have taken on increasing debt to do so.
Loan sizes have risen significantly since the federal government’s First Home Guarantee, which helps market entrants purchase a property with a 5 per cent deposit, was expanded in October last by Prime Minister Anthony Albanese.
It increased the price up to which first-home buyers could pursue properties to $950,000 in metropolitan areas and $650,000 in regional markets, and removed income caps that had previously applied.
PropTrack executive manager economics Angus Moore said a rise in the value of loans to first-home buyers since October last year reflected other data showing they were taking on bigger loans.
Mr Moore said separate figures had already shown a rising portion were taking in mortgages with a 10 per cent or less deposit, and the latest figures would be consistent with that.
PropTrack economist Angus Moore says there are multiple signs first-home buyers are taking out bigger loans since the expansion of the First Home Guarantee.
“We don’t have a lot of data yet on the impact of the scheme as we are still early in the transition period, but it is having an effect on loan sizes and loan to value ratios,” he said.
“But rising rates are reducing borrowing capacity and that will work in the other direction.”
Mortgage Choice broker David Thurmond said the vast majority of first-home buyers he had been working with this year had been using the First Home Guarantee to help them.
Mr Thurmond said while he was surprised the average loan size wasn’t higher, it was likely that figure was being kept lower by regional purchases.
In the near term, however, the broker said he expected there would be a decline in first-home buyer activity as well as loan sizes as rising interest rates reduced borrowing capacity and scared a number of market entrants off.
“Because of the rate rises we have had they have really cooled off in the last few months,” Mr Thurmond said.
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