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Housing

Interest Rate Cuts Spark Explosive Growth in Australian Home Lending

Strategic Insights

— 1 min read

The National Australia Bank reports a staggering 32% increase in home lending over the three months to May, with first-home buyers leading the charge. Economists at UBS and the Westpac-Melbourne Institute agree, citing a surge in house price expectations to levels not seen since 2010 and 2013, respectively. The catalyst for this growth is the start of the interest rate cutting cycle, which has led to a sense of urgency among buyers to secure mortgages before prices rise further. According to NAB's executive for home lending, Denton Pugh, investor loans are also showing significant strength, with first-home buyers' market growing 16% compared to the same period in 2024.

Key Takeaways:

  • The National Australia Bank reports a 32% increase in home lending over the three months to May, with owner-occupier loans accounting for the majority of the growth.
  • First-home buyers are leading the charge, with a 16% increase in lending compared to the same period in 2024.
  • Victoria, Western Australia, and Queensland are the top-performing regions, with first-home buyer activity climbing 28%, 22%, and 21%, respectively.
  • The pent-up demand for housing has been triggered by the expectation of further interest rate cuts, with many new borrowers front-running rates and securing mortgages before the latest cut in May.
  • The federal government's scheme, which enables first-home buyers to purchase with a 5% deposit without Lenders Mortgage Insurance, has contributed to the surge in first-home lending.
  • The Reserve Bank's interest rate moves are being challenged by views that property prices are driven by supply and demand, rather than interest rates.

Statistics:

  • 32% increase in home lending over the three months to May (NAB)
  • 16% growth in first-home buyer lending in the three months to May compared to the same period in 2024 (NAB)
  • 28% increase in first-home buyer activity in Victoria (NAB)
  • 22% increase in first-home buyer activity in Western Australia (NAB)
  • 21% increase in first-home buyer activity in Queensland (NAB)
  • Average Australian home price soared through the $1 million mark for the first time in the three months to March (Australian Bureau of Statistics)
  • Forecasting another three rate cuts by the National Australia Bank (NAB)

Sources:

  • National Australia Bank:
  • UBS:
  • Westpac-Melbourne Institute:
  • Australian Bureau of Statistics:

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