5% Deposit Scheme sparks big jump in Gen Z mortgage activity

Australia's expanded First Home Buyer (FHB) 5% Deposit Scheme has produced a marked rise in mortgage enquiries among younger borrowers, with new data from Equifax showing that the 18–25 age cohort recorded the steepest growth in demand of any age group in the six months to March 2026.

Equifax analysed credit enquiry volumes between October 2025 and March 2026, comparing them against the prior corresponding period. Across all FHB segments, demand at approved scheme lenders rose by 16.4%, while volumes at non-approved lenders fell 6.5% over the same period.

The 18–25 age group recorded a 22.8% increase in mortgage enquiries — the largest of any age group tracked. FHBs aged 26–35 grew 17.4%, and those aged 36–45 grew 16%.

"Rising mortgage rates often inevitably lead to discussions about a cooling housing market, but affordability is just one factor in the broader demand, supply and price story," said Kevin James (pictured right), chief solution officer at Equifax Australia.

"While demand is often driven by demographics or population growth, government policies can also have a significant effect - which is exactly what we are seeing six months into the expansion of the First Home Buyers 5% Deposit Scheme."

James noted that the Equifax analysis shows the scheme has successfully boosted demand, while also identifying a shift in mindset among potential first-home buyers.

"In particular, housing mobility has increased, with a good proportion of FHBs now seemingly prepared to explore outside of their local area or interstate," he said.

"While Gen Z buyers led the growth, FHBs aged 26-35 grew +17.4% and those aged 36-45 grew +16%. This widespread lift indicates that buyers across all age brackets are actively leveraging the policy incentive to bypass traditional deposit requirements and timelines." 

The scheme, which was expanded on 1 October 2025, now offers uncapped places, removes income thresholds, and applies to both new and existing properties within regional price caps. It allows eligible buyers to purchase with a 5% deposit without incurring Lenders Mortgage Insurance.

Roughly one third of first-home buyers are considering properties outside their current suburb. Of those casting a wider geographic net, 81.9% are moving to different parts of their state, 10% are managing to remain within their existing suburb, and 7.1% are crossing state lines.

 Source: Equifax 

"The data indicates that FHBs are actively searching for affordability, and while a majority are managing to stay close to home, others are exploring interstate and cross-border opportunities," James said.

"Of those FHBs migrating interstate, Equifax data shows the top two migration corridors nationwide consist of NSW buyers relocating to VIC (12.2%) and QLD (10.4%), which when you look at recent property prices in NSW, is unsurprising."

Among regional centres, younger FHBs are showing a preference for lifestyle locations including the Sunshine Coast, Gold Coast and Cairns. The 36–45 age group is driving the strongest growth in areas such as Toowoomba and the Central Coast.

"Our analysis shows that demand among age cohorts varies by region. Areas such as Toowoomba and the Central Coast are seeing their highest growth from the 36-45 demographic, indicating that older cohorts may be targeting specific regional centres for upsizing or family relocation, while younger buyers prioritise coastal towns".

 Source: Equifax 

The expanded scheme is also shifting demand toward lower loan values. Nationally, enquiries for loans in the bottom quartile by value grew 11.8%, ahead of the 9.3% growth recorded for the highest-value loan tier. The disparity is most pronounced in South Australia, where smaller loan demand rose 17% compared with 8.8% for the largest loans.

Equifax noted that despite the policy-driven uplift in market activity, first-home buyers carry structurally higher arrears rates than non-first home buyers across the country. "While the household resilience of FHBs has been steady so far, this segment does appear to carry an elevated risk profile compared to non-FHBs," James said.