A drop in mortgage demand across the country will see fewer buyers active in the market, with cost-of-living constraints heavily impacting the market.
Recent data showed the demand for mortgages had declined nationally, with first home buyers (FHB) leading the drop.
According to the latest Equifax data on consumer credit demand, mortgage demand from first home buyers suffered its largest year-on-year (YoY) decline since 2022.
Despite the government changes in a bid to bust first home buyers and the 5 per cent scheme, mortgage in FHBs dropped by 20.1 per cent compared to August 2025, continuing the downward trend seen over much of 2026.
Equifax chief solutions officer Kevin James said Queensland and NSW led the decline among first home buyer markets, each dropping in demand by more than 22 per cent.
“Younger Australians continue to be the most impacted amid the current market conditions and cost-of-living constraints,” James said.
While NSW and Queensland saw the largest drop from FHBs, all states saw demand suffer significantly compared to a year ago.
Victoria and Western Australia both fell by more than 18 per cent, while South Australia and the ACT fell by more than 15 per cent.
Additionally, the data found that the average mortgage size for first home buyers remained hovering around its all-time high of $740,000.
Mortgage sizes dropped among 18- to 25-year-olds to an average of $622,000, while 26- to 35-year-olds borrowed around $734,000.
Broader market trends
Looking beyond the first home buyer market, the data found that overall mortgage demand also declined significantly, falling 14.1 per cent compared to 12 months ago.
James said the result marked the fifth consecutive month of decline.
“While overall mortgage demand remains down at -14.1 per cent YoY, it is positive in some respects to see it has not continued its downward trajectory from the past few months and has softened slightly,” James said.
“However, consumers still appear to be apprehensive, with households actively re-evaluating their commitments, choosing to hold off on taking on massive new capital obligations while using short-term and unsecured credit to maintain household flexibility.”
The ACT and NSW saw the steepest declines in mortgage demand, falling by 17.6 per cent and 15.9 per cent, respectively.
Queensland, Victoria and South Australia suffered similar drops of between 15 per cent and 12.5 per cent.
Western Australia proved the most resilient market for mortgage demand, as the state recorded a decrease of 10.43 per cent.
Despite improving on previous monthly results, mortgage demand from investors remained 11.4 per cent lower in August than 12 months ago.
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