Author – Denton Pugh, NAB Executive for Home Lending. Originally published on realestate.com.au.

Higher interest rates over the past few years have made it harder for many Australians to enter the housing market. Borrowing power has been stretched, and for some, homeownership has felt out of reach. With the Reserve Bank of Australia (RBA) cutting the official cash rate for the first time since 2020, we have started to see a shift. CoreLogic’s February report shows buyers are regaining confidence, auction clearance rates are up, and property prices have started a gradual rebound.

Lower rates don’t just lift people’s confidence – they also increase borrowing power. And in a competitive market, those extra funds can be the difference between waiting a little longer, or finally making an offer on a home.

Even with improving conditions, saving for a deposit is one of the biggest challenges for many first-home buyers. While a 20% deposit is ideal, the good news is that there are more options available to help buyers get into the market sooner.

One is the government’s Home Guarantee Scheme (HGS). The HGS allows eligible buyers to purchase a home with as little as a 5% deposit, or 2% for single parents, without paying lenders mortgage insurance. There are also additional spots for those looking to buy in regional areas, where housing can be more affordable.

For those who don’t qualify for the scheme, we’re seeing buyers take different approaches. Some are teaming up with family or friends to purchase together, sharing the financial responsibility to get on the property ladder. Others are opting to rent-vest – renting where they want to live while buying in a more affordable location. This strategy helps buyers build equity and is often seen as an appealing choice for people who prefer living in cities or suburbs where buying can feel out of reach. Many are also broadening their search, considering apartments and townhouses instead of standalone houses or looking at different suburbs to find better value.

For many first-home buyers, the biggest challenge is simply understanding what’s possible. I often speak with customers who assume homeownership is years away, until they sit down with a banker and explore their options.

While visiting Queensland recently, I heard about a single parent in rural Queensland who thought buying a home was out of reach. With the help of the HGS, they were able to purchase a home with just a 2% deposit – something they never imagined could happen so soon. Similarly, in regional Victoria, a 39-year-old renter living with family realised they had more options than they thought and were able to take that first step into homeownership much sooner than expected.

Lenders are also playing a role in making homeownership more accessible. At NAB, we’ve expanded our LMI waiver program to include more professionals, including self-employed medical practitioners. This change means more Australians can enter the market without needing a 20% deposit. We also welcome the government’s recent update to how HELP debt is assessed for home lending. As the bank who called for this change, we look forward to working with the regulators to see it implemented.

So, what’s next for the market?

While lower interest rates will help more buyers get into the market sooner, we expect a gradual recovery in 2025, with stronger growth likely in 2026. For those looking to buy, now could be the time to explore your options.