Gen Z FHB Enquiries Jump 22% as Rate Fears Resurface

Mortgage enquiries from 18-25-year-olds jumped 22.8% in Q1 2026, but surging bond yields and high inflation are creating uncertainty for new borrowers.

First-home buyers are flooding back into the market — particularly young ones — but the economic backdrop is growing more complicated. New data from credit reporting agency Equifax shows mortgage enquiries from the 18-25 age group surged 22.8% in the first quarter of 2026, making Gen Z the fastest-growing cohort among new borrowers. At the same time, ABC News has reported that Australian government borrowing costs have reached their highest level in around 15 years, with global bond markets caught in a sell-off driven by rising inflation expectations and rate-hike fears.

For young Australians trying to secure their first mortgage in 2026, policy settings are more supportive than they have been in a decade. But the rate environment is getting more complicated by the week.

What Is Driving the Gen Z Mortgage Surge

The expansion of the government's First Home Buyers 5% Deposit Scheme in October 2025 is the primary catalyst behind the Gen Z mortgage enquiry surge. Equifax's Q1 2026 Consumer Market Pulse report, cited by ABC News, found the scheme has been particularly effective for 18-25-year-olds who face compounding obstacles to homeownership — HECS debt, a volatile job market, and purchase prices that make saving a standard 20% deposit an enormous hurdle.

As Equifax noted: "Historically, a cohort carrying the weight of HECS debt and navigating a volatile job market, the deposit barrier has become a significant obstacle to entry. This new data from Equifax demonstrates that Gen Z buyers, who have long been locked out of the market, are actively responding to policy changes."

The Q1 data reveals detailed patterns in how Gen Z is approaching the market:

- Only 10.9% of relocating first-home buyers stayed in their local area - More than 80% moved to other parts of their state - 7.1% moved interstate entirely to enter the market - Demand for the lowest 25% of mortgage loan values grew 11.8% nationally — well ahead of higher-value loan tiers

That last figure matters most. Gen Z borrowers are not overreaching. They are buying in the price brackets their budgets can handle — lower loan values where deposit requirements are smaller, stamp duty concessions often apply, and mortgage serviceability assessments are achievable at current rates. For a full breakdown of entry-level loan options, see our [first home buyer guide](/home-loans/first-home-buyer).

The Rate-Risk Backdrop You Cannot Ignore

Here is the complication that every aspiring first-home buyer in 2026 needs to factor into their planning.

ABC News reported on 20 May 2026 that Australian government borrowing costs had reached their highest level in around 15 years. This follows a significant sell-off across global bond markets, triggered by surging US inflation expectations and speculation about further interest rate increases in the United States — moves that typically lift funding costs for Australian banks and filter through to mortgage pricing with a lag.

The latest Australian inflation data reinforces the concern. The all-groups Consumer Price Index was 4.6% in March, with trimmed mean inflation — the RBA's preferred underlying measure — running at 3.3%. Trimmed mean inflation remains above the central bank's 2–3% target band, which constrains the RBA's capacity to reduce rates in the near term.

Financial markets reflected this nervousness sharply on 20 May 2026: the ASX 200 fell 1.3% to 8,496 points, setting a new 20-day low and sitting 2.5% lower year-to-date. Bond market sell-offs of the scale ABC News described typically translate, with a lag, into upward pressure on fixed-rate mortgage pricing.

What does this mean for a first-home buyer entering via the 5% Deposit Scheme? It means your repayment buffer matters more than it might have appeared six months ago. Use our [repayment calculator](/calculators/repayment) to stress-test what your repayments would look like if variable rates moved up by 1–2% from wherever you are quoted today. That buffer is not hypothetical planning — it is sound preparation.

What to Do If You Are a First-Home Buyer Right Now

The Equifax data confirms what experienced brokers observe in practice: the most successful first-home buyers are not waiting for perfect conditions. They are getting organised, being flexible on location — as the relocation data demonstrates — and targeting segments of the market where their deposit goes furthest.

Here is the practical checklist:

**Get pre-approved before you inspect.** When borrowing costs are volatile and serviceability buffers shift with market conditions, knowing your actual ceiling prevents costly mistakes. Understanding your [borrowing power](/calculators/borrowing-power) is the foundation of a credible property search.

**Model LMI costs carefully if you are outside the Scheme guarantee.** Borrowing above 80% of a property's value without a Scheme guarantee means paying Lenders Mortgage Insurance, which can add thousands of dollars to upfront costs. Our [LMI calculator](/calculators/lmi) gives you a clear dollar figure before you commit.

**Explore fixed-rate options alongside variable.** With bond markets signalling potential rate pressure, fixing part of your loan for a defined term can provide meaningful repayment certainty while you build equity in the early years.

**Comparison-shop rates actively.** The Gen Z cohort that Equifax is tracking is doing the right thing by engaging with the market. The next step is ensuring the loan product they ultimately take matches their actual needs — not just the first offer from the first lender they approach.

The Gen Z mortgage surge is a genuine sign of policy working. But first-home buyers entering a market shaped by rate-rise fears and elevated inflation need to go in with eyes open and fully prepared.

For the full market context behind this data, see the [ABC News report from 20 May 2026](https://www.abc.net.au/news/2026-05-20/asx-markets-business-live-news/106699784).