And to make the most of it

If you’ve been putting off calling your bank or mortgage broker, now might be the time. Fewer people are applying for home loans right now, and banks want your business more than usual.

For first home buyers, that’s good news. Lower demand, banks competing harder on price, and a range of government schemes are all lining up to make it a bit easier to get into your first home.

This article breaks down what’s happening in the home loan market, what it means for you, and how to make sure you get a good deal.

What’s happening with home loans right now

Fewer Australians are applying for home loans right now. This is partly because interest rates went up earlier in the year, and partly because the cost of living has made people more cautious.

Property investors have also pulled back. Earlier this year, the government changed some tax rules that made investing in property less appealing. Since then, fewer investors have been applying for loans, and some banks have reported a drop in applications of around 15% in just a few months.

On top of that, house prices themselves have started to fall. New data shows prices across Australia’s capital cities dropped for the first time in more than three years in the June quarter, ending a long run of growth. Sydney and Melbourne have led the falls, while cities like Adelaide and Perth are still going up, just more slowly than before.

For a first home buyer, falling prices can actually work in your favour. There’s less pressure to rush into a purchase, more properties are sitting on the market for longer, and buyers have a bit more room to negotiate than they did a year ago.

With fewer people applying for loans and prices cooling off, banks have less new business coming in. That’s pushed them to compete harder to keep the customers they have, while also attracting new ones.

Adding to this, the Reserve Bank of Australia (the body that sets the base interest rate for the country) held the cash rate at 4.35% at its August meeting, with most major bank economists now expecting rates to ease at some point next year. This may be why lenders are already starting to compete harder for customers – ahead of that rate cut.

Even without an RBA cut, smaller banks and lenders are moving on their own, offering lower rates to try to win customers over from the big four.

Why this is good news if you’re shopping for a home loan

When lenders are competing for customers, it works in your favour. Here’s what that can look like in practice.

If you already have a home loan, it’s worth calling your bank and asking if they can offer you a better deal. Mortgage brokers say that simply asking for a “discharge form” (the form used to move your loan to another lender) is often enough to prompt your bank to offer you a better rate or a cash incentive to stay. It doesn’t always work, but it costs nothing to ask.

Some banks are also offering cashback deals to new customers, including first home buyers. ANZ, for example, currently offers a cashback for eligible first home buyer loans over $250,000. These deals change often and aren’t guaranteed to stick around, so always check directly with the bank before assuming an offer still applies.

A word of caution: don’t choose a loan based on a cashback offer or a low rate alone. Fees, flexibility, and what happens to your rate after any introductory period matters more over the life of your loan than a one-off bonus.

Government supports for first home buyers

On top of lenders competing for your business, there are also government schemes designed to help first home buyers get into the market sooner, often with a smaller deposit than you might expect.

These include the Australian Government 5% Deposit Scheme, the Help to Buy shared equity scheme, state-based stamp duty concessions, and the First Home Super Saver Scheme, which lets you save part of your deposit inside superannuation.

Learn more about Help to Buy and other government supports: Help to Buy Explained

What loans are first home buyers actually choosing?

Nearly all new home loans in Australia are variable rate, not fixed. That’s true across the market generally, including for first home buyers.

Within variable loans, mortgage brokers and comparison sites commonly point first home buyers towards “basic” or “no frills” loans. These come with a lower interest rate than a bank’s standard product, but don’t include extra features like an offset account. For a first home buyer who doesn’t have much spare savings yet, that trade-off can make sense: you get a cheaper rate now, without paying for a feature you’re not ready to use.

A few of the big four offer simple, low-fee loans like this. Westpac’s Flexi First Option and ANZ’s Simplicity PLUS are both basic variable loans marketed directly at first home buyers, and NAB offers a comparable Base Variable Home Loan. CommBank’s Digi Home Loan is explicitly built around low-deposit options for first home buyers, and CommBank has reported that first home buyers applying for home loans online has more than quadrupled over the past year.

Worth knowing: not every “basic” or digital-only loan suits every first home buyer. Some digital lenders, including NAB’s UBank, require a deposit of 15% or more, which rules them out for buyers relying on a low-deposit government scheme. Always check the deposit and eligibility requirements before assuming a lower rate applies to you.

Also, none of this means a basic loan is automatically right for you. If you know you’ll want an offset account down the track, a loan with more features might work out cheaper over time. A mortgage broker can help you understand your options.

What to look for in a home loan right now

There’s no single “best” home loan for every first home buyer. The right one for you depends on your deposit, your income, and the type of property you’re after.

What we can say is that this is a good time to compare your options properly. Big four rates have held steady following the RBA’s August decision, but smaller lenders and digital-only banks are actively undercutting them to win new customers, and cashback deals can help cover some of your upfront costs, like conveyancing or moving expenses.

Combine that with the government schemes covered above, and it’s worth taking the time to compare properly rather than accepting the first offer you’re given.

How Penny can help

Working out which lender, which scheme, and which loan suits you isn’t something you should have to figure out on your own, especially while offers are changing so quickly.

A mortgage broker can compare current deals across the market for you, including offers that aren’t always advertised publicly, and explain how they work alongside any government scheme you’re eligible for.

Find a trusted mortgage broker or financial adviser in the Penny app to help you compare your options and move forward with confidence.

This article is general information only and does not constitute financial advice. Interest rates, cashback offers and lending conditions change frequently and can be withdrawn by lenders at any time. Always check current rates and offer terms directly with the lender, and speak with a licensed mortgage broker or financial adviser before making any decisions.

Sources
RBA. Statement by the Monetary Policy Board: Monetary Policy Decision — 11 August 2026

Domain. Australia’s Housing Boom Ends: First Quarterly Price Fall in More Than Three Years — 23 July 2026

Westpac. Flexi First Option Home Loan — accessed August 2026

NAB. Basic Variable Home Loan fact sheet — accessed August 2026

CommBank. Digi Home Loan — accessed August 2026, data as at 30 June 2026

Savings.com.au. CBA spruiks online home lending boom — 3 November 2025

The Adviser. Home loan commitments plummet as investor lending slumps — 14 August 2026

Yahoo Finance Australia. Aussies urged to call their bank as lenders slash rates: ‘You have to do it’ — 11 August 2026