Record Q4 2025 surge driven by first-home-buyer surge
Mortgage activity reached record highs at the end of 2025, fueled by a significant surge in first-home buyer demand and resilient borrower confidence.
According to new data from LMG, mortgage lodgements rose by 12% quarter-on-quarter during the final three months of the year.
This surge made the October-December period the strongest quarter on record for the aggregator group.
While the overall numbers were impressive, the flow of activity was notably lumpy throughout the final quarter of the year.
October stood out as a particularly strong month, largely due to the launch of the government’s expanded 5% Deposit Scheme. During this month, first-home buyers entering the market saw lodgements spike by a massive 49% above the previous six-month average.
Although November saw a slight cooling of demand, activity recovered strongly as the year drew to a close.
By the end of the year, lodgements for this segment remained 17% higher than pre-scheme levels seen earlier in 2025.
This momentum indicates that the broker channel is carrying a strong pipeline of business into the first half of 2026.
Settlements also reflected this strength, with December volumes up 30% year-on-year across the national network.
“Broker data gives us a clear view of how customers are actually acting, not just how they’re feeling,” said Ewen Stafford (pictured), executive director and chief executive of LMG. “What we saw through the December quarter was borrowers continuing to move forward with decisions they’d planned carefully, even as the media commentary became more cautious.”
Window of opportunity
The LMG report highlights that the growth in mortgage activity was not localised to a single region or city.
Instead, it was a broad-based movement that affected almost every state and territory in Australia.
New South Wales and Queensland were the standout performers, recording the highest increases in overall volume. Even Victoria, which saw slightly weaker growth, maintained the highest overall levels of activity for entry-level buyers.
A key trend highlighted in the report was the shift in borrower profiles toward owner-occupiers during this period. This segment grew by 28% during the quarter, vastly outperforming the investor market which saw significantly lower growth.
The data suggests that many Australians are finally finding a window of opportunity to enter the desire for property ownership and housing. This shift is being supported by brokers who are helping clients navigate complex government incentives and lending criteria.
Furthermore, the data proves borrower confidence is more resilient than headlines might suggest.
The report also emphasized that the broker's role is critical in providing education and choice to these first-time applicants.
Lending market trends
The record-breaking quarter for the lending outlook in Australia comes at a time when investor activity is potentially beginning to peak.
LMG data shows that investor lending has remained relatively flat since the September peak.
This cooling of the investor market may be a reaction to the anticipated interest rate environment and high entry costs.
Many investors appear to be taking a "wait and see" approach while owner-occupiers rush to secure properties for living.
Industry experts are watching to see if the recent "sugar hit" of the deposit scheme will lead to a sustained long-term boom. Early indications for 2026 suggest that borrowing behaviour and mortgage flows will remain strong.
However, LMG expects system housing credit growth to peak in early 2026 before settling.
Following this peak, a gradual slowing is expected as the full impact of prior rate hikes is finally felt across the economy.
As the market moves into a new cycle, the partnership between brokers and buyers will be more important than ever. The industry now looks toward the first quarter of 2026 to see if this record-breaking trend holds firm.
