Australia’s first home buyers are still taking out loans as property investors step back, data shows

Australia's property market has seen a shift in recent months, with first-time homebuyers making up the majority of new loan applications, while investors have largely stepped back. According to new data from Loan Market, a mortgage broking company, first-time buyers are still taking out a large number of loans, even as investor applications have declined.

The government's interest rate rises and tax changes, as well as the abolishment of negative gearing for most investment purchases, have slowed home buying activity. However, first-time buyer applications have increased, with a 10% rise in weekly average applications over the first half of August. Investors, on the other hand, have seen relatively steady applications compared to June.

This shift is driven by first-time buyers feeling more optimistic about the market conditions, while investors feel the opposite. The government's 5% deposit scheme has been instrumental in this shift, as it allows first-time buyers to borrow up to 95% of a property's value, waiving costly lenders' mortgage insurance (LMI). Since its establishment in 2020, the scheme has helped over 320,000 people become homeowners, saving them more than $2.5 billion in LMI.