The average new Australian mortgage has soared to almost $750,000 as investors, first-time buyers and existing owners drive up prices, prompting the Reserve Bank to declare the best way to deal with the nation’s expensive property market is to “build a lot more houses”.
Figures compiled by the Australian Bureau of Statistics show the average new mortgage in NSW is now at a record $873,000, while across Queensland it soared by $101,000 through 2025 to $736,000.
For the first time, the average mortgage taken out by homeowners is above $500,000 in every state and territory. The national average is $736,000, a near 50 per cent increase over the past five years
Investors took out a record 60,445 loans through the final three months of last year with the value of those mortgages jumping by almost a third over the past 12 months to a record $43 billion. Loans to existing owner-occupiers lifted by 4.8 per cent in the quarter to be 7.4 per cent up over the year.
The federal government’s decision to extend 5 per cent deposit scheme to all first-time buyers also fed the surge in loan sizes as they sought to gain a foothold in the property market.
Almost 32,000 first-time buyers took out a mortgage in the quarter, the largest number since early 2022 when official interest rates were at 0.1 per cent. The number of loans taken out by first-time buyers lifted by 9.1 per cent last year.
While the total number of mortgages taken by first-time buyers lifted by almost 7 per cent in the quarter, the value of loans jumped by 15 per cent.
JPMorgan economist Tom Ryan said the increase in first-time buyer activity suggested the average mortgage for those people lifted by 8.5 per cent in three months, one of the largest increases since the bureau started collating the data.
“This likely reflects the impact of the expanded 5 per cent deposit scheme, which allows home buyers to borrow more and put down less for a house of the same value, or alternatively purchase a more valuable property (up to state-specific caps) for the same deposit amount. Both dynamics increase the average value of first-home buyer loans,” he said.
The sharp lift in mortgage sizes occurred before the Reserve Bank’s February rate hike and the start of new restrictions on how much money commercial banks can lend to highly leveraged home buyers.
Both initiatives are expected to slow the lift in house prices that have forced Australians to take on super-sized mortgages.
Reserve Bank deputy governor, Andrew Hauser, on Wednesday pushed back suggestions that interest rates had a major impact on movements in property prices.
He said by international standards, Australia built a large number of homes but that it “needs to build a lot more”.
The smallest increases in mortgages were in the ACT (up 1.4 per cent to $659,000) and Victoria (6.6 per cent to $677,000), which are leading the nation in terms of new housing approvals.
Commonwealth Bank chief executive Matt Comyn, revealing the nation’s biggest home lender made a $5.4 billion half-year profit, is expecting one more rate rise this year but believes it will only have a limited effect on the property market.
“I don’t think it’s going to have a really significant impact. For households that have been … stretched, clearly, the prospect of increasing rate hikes, is not something that they’re looking forward to, but I think it will be a relatively brief period of interest rate hikes,” he said.
Hauser also signalled the Reserve, which markets expect to lift the cash rate by another quarter percentage point by June, will “do whatever is necessary” to bring down inflation.
He said the Australian economy was doing reasonably well, from the growth in private sector capital spending to its low unemployment rate. But the nation, including its businesses, had to boost productivity.
“The Australian economy isn’t doing too badly. What we do need to do is really relaunch these animal spirits,” he said.
The Coalition has said federal government spending drove the Reserve Bank’s decision to lift interest rates, demanding Prime Minister Anthony Albanese to apologise to all mortgage holders.
But Treasury secretary Jenny Wilkinson, a member of the Reserve Bank committee that unanimously backed last week’s rate rise, told a Senate committee that government spending had actually been lower than expected through the second half of last year.
She said a surprise lift in business spending, stronger household expenditure and a better global economic outlook had combined to push up inflation.
“What is critical to understand is what are the underlying factors or drivers that have changed,” she said.
“And the stance of fiscal policy … that has not changed.”
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.
Clancy Yeates is deputy business editor. He has covered banking and financial services, and was previously national business correspondent in the Canberra bureau.Connect via X or email.