First-home buyers benefit from fresh mortgage war

From low interest rate specials to 300,000 frequent flyer points, lenders are battling it out for a bigger slice of Australia’s $2.4 trillion mortgage market. And the often-ignored first-home buyer is now sharing in the spoils.

On Wednesday, the federal government dramatically broadened its Home Guarantee Scheme that allows people to buy a home with as little as a 5 per cent deposit without having to pay the expensive lenders mortgage insurance that usually applies to borrowers with less than 20 per cent deposits.

Thirty-eight lenders are part of the revamped scheme, which is expected to push house prices higher, although that list does not include two of the big five banks, ANZ and Macquarie Bank. Macquarie has been on its own successful crusade to boost borrowers, with new figures from banking regulator APRA showing it grew its housing loans book by 21.6 per cent to $150.5bn in the year to August, well above overall market loan growth of 5.9 per cent.

Research group Canstar’s data insights director, Sally Tindall, said competition among lenders had already started intensifying and she expected this to continue.

“First-home buyers need all the leg-ups they can get,” Ms Tindall said.

“It has already heated up. What we can see from our lowest-rate lists is it’s now dominated by first-home buyer exclusive offers, which is not something we typically see.

“The lowest rates are often reserved forrefinancers with a giant wad of equity behind them rather than first-home buyers with a 5 per cent deposit.”

Ms Tindall said lenders were offering first-home buyers mortgage rates as low as 4.99 per cent.

She said it was positive to see many banks offering low rates to customers using the Home Guarantee Scheme rather than the typically higher rates they charged for people with small deposits.

Housing loans

Picture: Jake Nowakowski

	Amount	Market share	Monthly change	Year-on-year change
CBA	$599.0bn	25.3%	+0.5%	+6.2%
Westpac	$490.0bn	20.7%	+0.3%	+2.8%
NAB	$337.1bn	14.3%	+0.4%	+5.3%
ANZ	$319.2bn	13.5%	+0.3%	+5.3%
Macquarie	$150.5bn	6.4%	+1.9%	+21.6%
All ADI loans	$2.36 trillion	100.0%	+0.5%	+5.9%

Source: Canstar, APRA monthly authorised deposit-taking institution (ADI) statistics for August 2025

Canstar’s database shows 21 of the scheme’s lenders are offering rates below 5.5 per cent.

Cashback deals of between $2500 and $4000 are still being offered by some lenders, although experts say these have been reducing and replaced by more simpler, lower interest rates. Ms Tindall said: “Our research shows a low rate trumps a one-off perk in the longer term”.

A report this week by comparison website Mozo.com.au said fixed rates had been falling and several lenders had been making further small cuts to variable rates for various loan types and customers.

“Commonwealth Bank is now offering as much as 300,000 Qantas Frequent Flyer points depending on loan size for new Digi Home Loan applications submitted online until the end of November and approved by the end of May 2026,” the Mozo report states.

Oracle Lending Solutions managing director Angelo Benedetti said the expanded Home Guarantee scheme was “a great opportunity for banks to take advantage of it”.

“Banks are providing some really sharp rates, which they weren’t doing for a long time,” he said.

“We are going to see competition heat up. We are getting emails galore in relation to the scheme, saying they are expecting a high volume of transactions.”

Mr Benedetti said some lenders were offering two-year fixed rates under 5 per cent, which was attractive to borrowers given the current uncertainty about whether any more Reserve Bank interest rate cuts would be coming.

On Tuesday the RBA kept its official cash rate on hold at 3.6 per cent and dampened expectations of another rate cut this year, amid stubborn inflation.

This article first appeared in The Australian as Banks wage war over first-home buyers as loan scheme expands