Perhaps surprisingly given the February rate cut, home loan activity remained subdued in the March 2025 quarter.
While lending volumes were up 15% compared to the same time last year, approvals actually fell compared to February—suggesting the cash rate move has yet to spur significant demand.
The data also points to diverging market conditions nationwide. Loan activity surged in NSW, SA, QLD, and WA, while Victoria showed minimal growth. Investor lending climbed sharply in Adelaide, South Australia, and coastal Sydney, but dropped notably in Melbourne.
Overall, borrowers continue to favour more affordable markets, with loan sizes rising in the country’s less expensive states.
In this week’s newsletter, we take a look at what the major political parties are promising for first home buyers if elected.
In the past week, as expected, Australia’s major political parties have unveiled distinct housing policies aimed at assisting first-home buyers.
The following is what they have announced so far.
Labor Party Initiatives:
- 5% Deposit Scheme: Labor’s proposed 5% Deposit Scheme represents a significant expansion of the existing First Home Guarantee program. While the current scheme is limited by income thresholds (singles earning up to $125,000 and couples up to $200,000) and capped at approximately 50,000 places annually, the new proposal removes these income caps and place limits, making it universally accessible to all eligible first-home buyers. Additionally, property price caps will be adjusted to reflect average prices in each city and region. This expansion aims to assist a broader range of buyers, particularly in high-cost areas, by reducing the deposit barrier and eliminating the need for Lenders Mortgage Insurance, thereby facilitating earlier entry into the housing market.
- Affordable Housing Construction: Labor has committed $10 billion to build 100,000 new homes over eight years, prioritising access for first-home buyers. This initiative is part of a broader strategy to increase housing supply, ease affordability pressures, and support secure housing options for Australians priced out of the market.
Coalition Party Proposals:
- Mortgage Interest Tax Deduction: The Coalition’s First Home Buyer Mortgage Deductibility Scheme allows eligible first-home buyers to deduct interest paid on up to $650,000 of a mortgage for newly built homes from their taxable income over five years. This initiative targets individuals earning up to $175,000 and couples up to $250,000, aiming to reduce borrowing costs and encourage new home construction. For instance, a buyer earning $120,000 with a $650,000 mortgage at 6.1% interest could save approximately $12,000 annually. While industry groups support the policy for boosting housing supply, economists caution it may inflate property prices and favour higher-income earners.
Economists have expressed concerns that both major parties’ policies may increase housing demand without adequately addressing supply constraints, potentially leading to higher property prices.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
