More home buyers take up government help to purchase
While more first home buyers and single parents took up Home Loan Guarantees in FY23, about 17,500 spots were left on the shelf
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More home buyers are using government home loan guarantees to help them purchase a property, however, only two-thirds of the 50,000 guarantees on offer in FY23 were taken up.
More than 32,500 guarantees were issued in FY23, according to Housing Australia’s annual report on the Home Guarantee Scheme. The scheme comprises three segments – the First Home Guarantee (FHBG), the Family Home Guarantee (FHG) and the Regional First Home Buyer Guarantee (RFHBG).
The schemes allows first home buyers to purchase with a mere 5% deposit, and single parents need just 2%. This is vastly lower than the standard 20% deposit required by most lending institutions. In FY23, just under 70% of FHBG guarantees were taken up, along with just 60% of RFHGB guarantees and only 36% of FHG guarantees. The remaining guarantees expired.
Those using the scheme represented one in three of all first home buyers across Australia in FY23, up from one in seven in FY22. According to the report: “The dramatic change is likely due to a combination of the increased number of available Scheme places in 2022–23, the widened eligibility within the Scheme and first home buyers facing a more challenging purchasing environment.”
Housing Australia’s head of research, data and analytics, Hugh Hartigan said substantial increases in interest rates since May 2022 had led to more buyers relying on government help to buy a home. “The broader macroeconomic environment with rapidly rising interest rates has substantially decreased mortgage serviceability with flow-on effects for affordability and this has led to first home buyers relying more heavily (proportionally) on the scheme than in previous years,” he said.
Among the trends are an increasing number of younger Australians and essential workers seeking help. More than half of all places under the FHBG and RFHBG were taken up by first-time buyers aged under 30. That’s up from about a third in FY20, when the scheme was first introduced. About 14% of FHBG guarantees issued in FY23 went to buyers aged 18 to 24 years, up from 3% in FY20. Essential workers such as teachers, nurses and social workers took up 7,721 guarantees in FY23, up from 5,650 in FY22.
At a state and territory level, demand for guarantees remained strongest in Queensland and Western Australia in FY23. Buyers in Greater Perth, Melbourne, Greater Brisbane and regional Queensland received the largest number of guarantees in FY23.
The most popular postcodes for scheme buyers were 4740 (Mackay Harbour, QLD area), 6112 (Armadale, WA area), 4207 (Beenleigh, QLD area), 4350 (East Toowoomba, QLD area), 3064 (Craigieburn, VIC area), 4305 (Ipswich, QLD area), 6171 (Baldivis, WA area), 6164 (Hammond Park, WA area), 3029 (Truganina, VIC area) and 4680 (Gladstone, QLD area).
The scheme has been expanded for FY24 to include eligible permanent residents, non-first home buyers who have not owned a property in the past 10 years, and any two applicants such as friends, siblings, and married or de facto couples. The FHG has also been expanded to include eligible single legal guardians.
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The typically busy spring season for the housing market was a dud, and the summer isn’t looking much brighter.
Housing services companies like Zillow Group and Rocket RKT +3.78% were loud and clear last week on earnings calls: Rocket CEO Varun Krishna called the quarter through June “one of the toughest spring housing markets in years.”
Jeremy Hofmann, Zillow’s chief financial officer, said on a conference call that the company predicted earlier this year that the market for mortgages would be flat. “We actually now think it’s going to be down low-to-mid-single digits,” he said.
The rest of 2026 will remain challenging for mortgage origination volume, says KBW analyst Bose George. The question now is what happens in 2027. “If mortgage rates remain [around] 6.75%, I think that’s going to be challenging even for next year,” he says.
But what’s bad news for mortgage companies could be a positive for bargain hunters. Buyers can expect prices to grow more slowly—or mildly decline—with less competition as long as mortgage rates remain unpredictable.
Mortgage rates at the beginning of the year were solidly below year-ago levels, notes Zillow senior economist Kara Ng. But they surpassed last year’s levels recently, she adds, referencing Freddie Mac’s weekly survey of 30-year fixed mortgage rates. Last week’s reading, at 6.69%, was higher than year-ago levels for the first time in 2026.
“From the affordability point of view, it’s going to get more challenging in the second half of the year,” she says. “And when affordability gets more challenging, that impacts sales and home price appreciation.”
Mortgage application data tracked by the Mortgage Bankers Association has cooled since the beginning of the year. The trade group expects that the number of mortgage originations in the remaining two quarters will lag behind last year’s levels, after exceeding 2025 levels in the first half.
Rocket’s early-stage data—which the company told Barron’s it derives from its brokerage Redfin, demand for its mortgage products, and signs in its servicing portfolio that a homeowner is preparing to refinance or move—“leads us to expect the third quarter mortgage market to be smaller than the second,” Chief Financial Officer Brian Brown, said on the company’s call. He added that such an occurrence is “something the industry has not seen since 2022.”
Prices will be about flat nationally, Ng says. Zillow’s most recent forecast, which shows how values are expected to change in the year ending June 2027, show them dropping in roughly half of the 100 largest U.S. metros for which data is available.
Buyers aren’t rushing in at a time when mortgage costs are rising and unpredictable. But those with the right combination of patience and cash could stand to benefit. “If you are financially qualified to buy a starter home, you are facing less competition and you’re more likely to get a price cut,” Ng says.
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