Spring Surge: Big Boost For First Home Buyers
When the Reserve Bank of Australia (RBA) meets next, a rate cut is almost off the table, but this pause isn’t likely to slow down the property market. Momentum is building, especially for first-home buyers, across the nation. From 1 October 2025, major changes to the Home Guarantee Scheme (HGS) come into effect with no income caps, unlimited places, and higher property price caps. At the same time, auction clearance rates are climbing, even as more homes hit the market. With Spring in full swing, all signs are pointing to a confident and active housing market.
Changes to the Home Guarantee Scheme (HGS) go live
The Sydney property price cap under changes to the HGS scheme has jumped from $900,000 to $1.5 million.
Saving a 20 per cent deposit for a property at this price would require saving around $367,000, which includes the amount needed for stamp duty. This is to avoid paying lenders' mortgage insurance (LMI).
Under the new rules, first home buyers only need a 5 per cent deposit and money for stamp duty. Then, the government covers the LMI (which at this level would typically cost $50,000), and the participating lender provides you with a competitive rate, the same rate as if you had a 20 per cent deposit.
That’s only a deposit of about $140,000, a game-changing difference that makes saving for a first home much easier and opens doors to more competitive loan options.
Risks First Home Buyers should consider
We do need to understand the granular details and also make sure the strategy for each person lines up with their objectives. It’s a lot of debt against a property and if the property does go down in price, you could be in a position where the debt is more than the property value which is known as negative equity. If history is anything to go by though, this isn’t likely, and a property crash would need to happen for this result to eventuate. With population growth, low supply and high construction costs, and a sound workforce in this country, a crash isn’t likely – not any time soon.
Clearance rates signal renewed confidence
Off the back of recent rate cuts already provided to our economy, these first-home owner initiatives, and the typical Spring boost that our property market receives each year, our clearance rates are up. Preliminary auction clearance rates in the capitals are now at their highest since October 2021. More homes are coming onto the market, yet demand is keeping pace — a clear sign of growing buyer confidence.
For sellers, it’s encouraging news. For buyers, it shows competition is strong and likely to stay that way through Spring.
What to watch in the week ahead
These figures will give the clearest read yet on where the economy stands and what the RBA may decide at its next meetings.
It is not expected that we will see a rate cut this September. RBA Governor Michelle Bullock said earlier this week, “domestic data have been broadly in line with our expectations or, if anything, slightly stronger,” suggesting the economy does not need another rate cut yet.
Economists are leaning towards a November rate cut, but it’s expected to be a tight call. Either way, the data released in the coming days will set the tone for the rest of 2025.
Final thoughts
With government support kicking in, clearance rates at their strongest in years, and the prospect of further rate relief ahead, conditions are looking positive for both buyers and sellers this Spring. For first home buyers, the new HGS changes could be the difference between waiting on the sidelines and finally stepping into the market.
At Black & White Finance, we know that taking on more debt can feel daunting, especially for first home buyers, which is why we always weigh up the risks carefully to make sure these initiatives work in your best interests. For all our existing clients, we review loans every six months to keep things on track. If you’d like a fresh set of eyes on your loan now, just reply to this email, and John, Michael, or I, or one of our team members, will make sure you’re on the best terms possible.
P.S. We’re honoured to have been named a finalist for Best Customer Service in Australia at the Australian Mortgage Awards. For a small business like ours, this recognition means a lot.
If you know someone who’d benefit from the way we look after our clients, we’d be grateful if you passed on our details. Word of mouth is everything to us, and we don’t take your trust for granted.
🐾 New Mascot
Meet the new Black & White Finance mascot, Poppy.
Poppy is 14 weeks old, a bundle of joy for our family and brings a lot of love and energy into our team. Bites a little too much for now, but we're working on that.
Feedback
We’d love to hear what you think about our content or how we could improve to make your experience better. Please send a note to peter@blackandwhitefinance.com.au to let us know your thoughts.