First-buyer applications down 22.6% in Queensland as rates rise again

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Kooky

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The Reserve Bank raised the cash rate by a quarter of a percentage point to 4.60 per cent on Tuesday 29 September 2026, the fourth increase of the year. It landed on a group of buyers who had already pulled back. Equifax figures for August, reported by Savings.com.au on 18 September, show mortgage applications from first home buyers in Queensland were 22.6 per cent lower than in August 2025, the sharpest fall of any state and a fraction ahead of New South Wales at 22 per cent.

On the same day as the rate decision, The Adviser published modelling by Aussie Home Loans that puts a dollar figure on what the year's rate rises have done to a first buyer's budget. A couple with a combined income of $200,000, it found, can borrow $97,929 less after four increases than they could before the first.

Equifax, August 2026, reported by Savings.com.au on 18 September; Reserve Bank decision and Aussie Home Loans modelling, reported by The Adviser on 29 September 2026.

The decision and what it adds to a repayment

The increase took the cash rate from 4.35 per cent to 4.60 per cent. The Adviser reported that the Monetary Policy Board's decision was unanimous and that it is the fourth rise of 25 basis points since February. The earlier three came in February, March and May. The Board next meets to decide on rates on 3 November 2026.

For someone who already has a loan, The Adviser put the cost of this rise at about $90 a month on a variable-rate mortgage of $600,000, once lenders pass it on. That loan size is close to what Queensland first buyers have been taking. The Australian Bureau of Statistics put the average first home buyer loan in the state at $633,156 in the June quarter of 2026.

Mortgage Choice chief executive Anthony Waldron told The Adviser the decision was unsurprising after the latest consumer price figures showed inflation remaining high. Sam White of Loan Market Group warned that the increase "could be the straw that breaks the camel's back for buyer confidence."

What four rises do to borrowing capacity

A rate rise affects a first buyer twice. If they have bought, the repayment goes up. If they have not, the amount a lender will offer goes down, because lenders test whether a borrower could afford the repayments at a rate above the one being charged. When the rate being charged rises, so does the test.

Aussie Home Loans modelled this for a couple earning $200,000 between them, The Adviser reported. Before this year's increases the couple's maximum borrowing capacity was $1.089 million. After three rises it had fallen to $1.013 million. The fourth, delivered on 29 September, takes it to $991,071.

The fourth rise alone removes about $22,000 of capacity, and the four together about 9 per cent of the starting figure. That is in line with a rule of thumb quoted in the same article by Alex Veljancevski, founder of the brokerage Eventus Financial, who said a one percentage point increase in mortgage rates could reduce borrowing capacity by roughly 10 per cent. The four rises of 2026 add up to exactly one percentage point.

Aussie's point, as The Adviser reported it, is that the loss outweighs what a first buyer gains from softer prices: its modelling found the fall in capacity exceeds the benefit of a 2 per cent decline in property prices. A home that is 2 per cent cheaper is of limited help to a buyer whose maximum loan is 9 per cent smaller.

A couple on $200,000 is above the income of many first buyers, and the dollar figures scale down with income. The proportion is what carries across. The article also raised a second pressure: investors looking for lower-priced properties compete for the same homes, so a first buyer can be squeezed between a smaller loan and a thin supply of homes within it.

August's applications, state by state

The Equifax numbers describe the month before the latest rise. Nationally, first home buyer mortgage demand in August was 20.1 per cent lower than a year earlier, which Savings.com.au reported as the steepest decline since 2022. Mortgage demand overall fell 14.1 per cent, the fifth consecutive month of contraction.

Queensland and New South Wales recorded the sharpest pullbacks among first buyers, at 22.6 per cent and 22 per cent. The retreat was led by younger applicants: demand from those aged 18 to 25 fell 21.7 per cent and from those aged 26 to 35 fell 18.1 per cent. Broker News, reporting the same release on 25 September, set those figures beside a fall of just 1.7 per cent among borrowers aged 66 and over.

Queensland has now had the largest first-buyer decline of any state for four months running, on the monthly figures reported through the winter.

The August figure is the first in which Queensland's fall was smaller than the month before: 22.6 per cent against 25.2 per cent in July. The national figure kept deepening, from 19.2 to 20.1 per cent, so the gap between Queensland and the country as a whole narrowed from 6 points to 2.5.

One month does not make a turn, and the comparison is with August 2025, when first-buyer interest was building ahead of the expanded 5% Deposit Scheme. But Equifax executives sounded a similar note. Moses Samaha, an executive general manager at Equifax, told Broker News: "We may well be at or near rock bottom in terms of this contraction cycle." MPA reported him adding the caution that another rate rise could push that floor lower. The rate rise he was referring to has since arrived.

Deposit help meets the serviceability test

The federal 5% Deposit Scheme, expanded on 1 October 2025, lets a first buyer purchase with a 5 per cent deposit and no lenders mortgage insurance, with no income cap. In Queensland it covers homes up to $1,000,000 in Brisbane, the Gold Coast and the Sunshine Coast and up to $700,000 elsewhere, according to the First Home Buyers website.

What the scheme does not do is change how much a lender will advance. Savings.com.au reported that the average first home buyer mortgage in the Equifax data sits at $740,000 and has not moved despite the deposit assistance. Kevin James, Equifax's chief solutions officer, put it this way: "The 5% deposit schemes were there to help, but it's only one barrier to entry."

A smaller deposit makes the other barrier higher. A buyer who puts down 5 per cent borrows 95 per cent of the price, and it is that larger loan the lender tests at the higher rate. On the Aussie figures, a couple putting down 5 per cent could have stretched to a home of about $1.15 million before the first rise and can now reach about $1.04 million, before any change in their own income or expenses.

This is where the shared equity schemes differ from the deposit scheme. Queensland's Boost to Buy and the Commonwealth's Help to Buy reduce the loan itself, by having the government pay 25 to 40 per cent of the price in return for a share of the home. Both are income tested and limited in places, so they are open to far fewer buyers.

What it means around Queensland

The effect of a smaller loan depends on where a buyer is looking. In Brisbane, the Gold Coast and the Sunshine Coast, where the deposit scheme's cap is $1,000,000, a couple at the $200,000 income level in the Aussie example has a maximum loan of $991,071, so the most they can pay with a 5 per cent deposit has moved much closer to that cap. Buyers on lower incomes were already well below it.

In the rest of the state the cap is $700,000, and the constraint for most first buyers is income, not the cap. A single buyer, or a couple with one income, will find the reduction in capacity is the same in proportion and bites at a lower price.

For buyers already in a home, the calculation is about repayments. The Adviser's figure of about $90 a month on $600,000 is for one rise. A first buyer who took out a variable loan before February has now had four.

Agents and brokers working with first buyers will see the effect in pre-approvals. A pre-approval issued before the decision may be reassessed, and a buyer who was approved near their limit is the most likely to find the figure revised. Mark Haron of the aggregator Connective told The Adviser that brokers can review a client's loan and help borrowers work out what practical options are available.

What comes next

The Reserve Bank's next decision is due on 3 November. Equifax's September mortgage demand figures, which will include a few days of applications made after the rise, are due in October.

Kevin James of Equifax told Savings.com.au he would like to think the market is nearing the bottom of its soft patch, and that the softness could run toward the end of the year and potentially into early 2027. That is a view, not a forecast to bank on, and it was given before the rate rise.

For Queensland first buyers the month ends with two facts pulling in different directions. Fewer of them are applying, which eases competition for the homes they can afford. And, on Aussie's modelling, each can borrow about 9 per cent less than before the first rise of the year.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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