Western Australia mortgages sky rocket by $75,000 amid national binge ahead of Labor’s first homebuyer scheme

Western Australia has led the way with a $75,000 annual increase in the size of new home mortgages, with rate cuts driving the nation’s biggest borrowing binge before an expected surge in first homebuyers. Across Australia, the average size of new loans for owner-occupiers buying their own home soared by 8.1 per cent in the year to September 30 to a new record high of $694,000. The increase was more than double that of wages growth as borrowers took advantage of cheaper money, following three interest rate cuts from the Reserve Bank of Australia in February, May and August. But in WA, the increase was even steeper at 13.4 per cent, with the State’s average home loan size not far behind, reaching a record $633,000. WA’s $75,000 annual increase was much bigger than the national average rise of $52,000. Only New South Wales ($828,000), Queensland ($687,000) and Victoria ($647,000) had bigger average, owner-occupier mortgage sizes. WA was ahead of Canberra ($628,000), South Australia ($616,000), Tasmania ($484,000) and the Northern Territory ($481,000). Factoring in a 20 per cent deposit, a $633,000 mortgage in WA would buy a $791,250 home, which would still be well below Perth’s median house price of $926,464, based on Cotality data. This would enable to buyer to chase a property in the city’s east in Brabham, where the mid-point house price is $798,490, or in neighbouring Henley Brook, which has a mid-point price of $790,725, or Dayton at $798,337. For those wanting to live by the beach, Alkimos, 43 kilometres north of the city, has a middle-market house price of $781,426. WA also had a 10.3 per cent annual increase in the size of investor loans, which grew to $589,000. In comparison, the national increase for investor loans was 5.7 per cent. Perth’s rental vacancy rate of 0.7 per cent for October was also well below the capital city average of 1.2 per cent, new SQM Research data showed. WA has a bigger gap between owner-occupier and investor loans than exists nationally, suggesting local investors are buying in more affordable suburbs - which could be an encouraging sign for renters. AMP chief economist Shane Oliver said WA’s nation-leading population growth was leading to the big surge in borrowing. “It’s the case of population growth in Queensland and WA,” he told The West Australian. “They’re the States that are seeing the strongest property markets. “It’s meant that people have to borrow more to get into those States. Then, of course, when they borrow more, then it just leads to a further increase in prices in those States.” The latest increase in the size of both owner-occupier and investor loans occurred before the Federal Government’s new five per cent Deposit Scheme came into effect on October 1, covering all property newcomers regardless of income. Labor’s program means a first-home borrower doesn’t need the usual 20 per cent deposit to avoid having to pay lenders’ mortgage insurance, with taxpayers instead becoming the guarantors. New price limits are now more reflective of median capital city house prices. “The likelihood is that the scheme will invigorate first-homebuyer demand,” Dr Oliver said. “It actually looked to be going sideways in the September quarter. The growth was mainly in investor borrowing but if we now invigorate first-home buyer borrowing, it probably adds to the heat in an already overheated market.” Across Australia, investor loan activity drove most of the lending market resurgence, with a 12.3 per cent increase in the number of new mortgages over the year. House prices are soaring despite weak growth in owner-occupier and first-home buyer lending, which grew 1.7 per cent and 0.9 per cent respectively. First-home buyers made up 20.9 per cent of new borrowers, compared with 40.7 per cent for investors in the September quarter. The value of new investor loans hit a new record high of $39.8 billion. The number of new investor loans was also a record at 57,624. Dr Mish Tan, the ABS’s head of finance statistics, said RBA rate cuts in 2025 had spurred investor activity. “Falling borrowing costs and low vacancy rates are favourable conditions for investors,” she said. Westpac economist Neha Sharma said an undersupply of housing was likely to lead to Australians borrowing even more to get into the housing market. “While the impact of this year’s RBA rate cuts will gradually fade, the current housing supply-demand imbalance alongside a recent re-tightening in rental markets should lend a hand to lending activity,” she said.