Another Rate Hike Looms as Low-Deposit Mortgage Surge Hits Record
Australian banks wrote $5.4 billion in loans with deposits of 5% or less in a single quarter – a 63% surge that is the sharpest recorded rise since APRA began tracking the data in 2019. That confirmation landed on the same day the RBA's deputy governor admitted the board has no "high confidence" that the cash rate at 4.10% is tight enough. This week delivered five interconnected stories that every mortgage holder and aspiring buyer needs to understand before May.
The RBA Lacks Confidence Rates Are Tight Enough – A May Hike Is Now the Consensus Call
RBA Deputy Governor Andrew Hauser told an audience in New York on 15 April that the board does not have "high confidence" that the current cash rate of 4.10% is set at the right level. He described the spike in energy costs driven by the conflict in the Middle East as a "central banker's nightmare" – a scenario where inflation rises while economic growth softens simultaneously. His comments spooked markets already bracing for another rate decision at the board's May meeting.
Hauser was explicit that if inflation risks outweigh the growth slowdown, the board will not hesitate to tighten further. "Inflation risks might still be on the upside in the medium term, in which case we're going to have to respond," he said. Headline inflation stands at 3.7%, with underlying measures above 3.8% – both well outside the RBA's 2–3% target band. The Westpac–Melbourne Institute Consumer Sentiment Index fell 12.5% in April to 80.1, its steepest single-month drop since the early days of COVID-19.
NAB, Westpac, and CBA are all forecasting at least one more hike, with markets pricing a lift to 4.35% in May and the possibility of further moves before year end. For borrowers on a $600,000 variable mortgage, each 25-basis-point rise adds roughly $90–100 per month to repayments. Two more hikes – if they eventuate – would add approximately $200 per month to that example loan.
If the RBA hikes to 4.35% in May – which markets are now pricing as highly likely – most major bank variable rates will rise within days of the decision. If your rate is not currently fixed, your monthly repayments will increase. Speaking with a broker now about your options is the most practical step you can take before that meeting.
APRA Confirms a 63% Surge in 5% Deposit Loans – and It's Watching Every Bank
APRA acting executive director Ian Beckett appeared before the Senate Select Committee on Productivity on 22 April and confirmed that banks wrote $5.4 billion in owner-occupier loans with deposits of 5% or less in the December quarter. That is a $2.1 billion increase – a 63% jump on the prior quarter and the sharpest rise since APRA began publishing the series in 2019. The surge reflects the expanded federal government 5% Deposit Scheme, which removed income caps and introduced unlimited places from October 2025.
Beckett was clear that APRA is monitoring the data closely. Under the regulatory framework, banks must still report all lending at 95% LVR regardless of whether the government guarantee covers part of the exposure. "We get banks to report at 95% LVR, even if part of it is guaranteed, so we're still checking that it's within the banks' risk appetite," he said. For context, APRA's separate debt-to-income cap – limiting high-DTI loans to 20% of new lending from February 2026 – applies across all lending, not just scheme participants.
One detail brokers are flagging with clients: some borrowers who were pre-approved under the scheme late last year discovered their borrowing power had shrunk by the time they sought formal approval in March. Rising interest rates between pre-approval and formal application reduced what lenders will lend. If you are currently pre-approved under the scheme, talking to a broker about whether your approval still holds is worth doing before any deposit is paid.
Beckett declined to label a 95% LVR loan inherently dangerous, saying "it depends on whether the loan is well secured and the person can service the debt." APRA's position is about concentration risk and prudent lending standards, not a ban. The system is currently absorbing the expansion without signs of stress – non-performing household loans remain very low.
SA and the ACT Just Expanded the Path to Home Ownership – What Changed This Week
Two significant first home buyer announcements landed on 24 April. The South Australian Malinauskas government expanded its HomeStart Finance low-deposit loan products, including a 2% deposit option for eligible buyers purchasing a new house and land package with a selected builder. Combining the expanded eligibility with the 2% deposit option could save newly eligible buyers up to $25,500 on the deposit for a home worth up to $850,000. The Starter Loan – an interest-free, repayment-free facility of up to $10,000 over seven years – remains available to help cover upfront costs for lower-income buyers.
Separately, the federal Albanese government and the ACT government signed a $250 million agreement to fund enabling infrastructure for approximately 4,900 homes. More than 1,700 of those dwellings will be reserved for first home buyers. The funding envelope includes $37.5 million to unlock 75 homes in the Kingston Arts Precinct and $12.5 million for works in Weston Creek supporting 150 homes. The ACT is the second jurisdiction after South Australia to sign onto the Commonwealth's commitment to deliver up to 100,000 first home buyer homes nationally.
Federal Housing Minister Clare O'Neil said the government remained "determined to make it easier for young people and first home buyers to achieve the dream of owning a home." Master Builders Australia CEO Denita Wawn backed the package, saying civil infrastructure funding is essential to meeting National Housing Accord targets – with current annual approvals of 196,491 dwellings still 18% below the 240,000 pace required by the Accord.
Lender Delays Are Costing Borrowers $44 Million a Year – MFAA Demands a Legal Fix
MFAA CEO Anja Pannek appeared before the same Senate productivity inquiry on 22 April and called the current home loan discharge process "unnecessarily slow and complex." She told the committee that borrowers routinely wait up to 30 days for their existing lender to process a refinance discharge, and that this delay is costing Australian borrowers $44 million per year in lost savings. Her proposed fix is a mandated 10-business-day maximum discharge period – legally enforceable, not voluntary.
Pannek outlined three specific problems. First, there is no enforceable timeframe for discharges, leaving borrowers uncertain and exposed. Second, some lenders use retention tactics – offering a modest rate discount when a borrower wants to leave, only to come back with a sharper offer once the discharge request is formally lodged. Third, some lenders refuse to allow brokers to complete the discharge on their client's behalf, forcing borrowers to make phone calls or provide wet signatures even when an authorised broker is already handling the transaction. The MFAA also wants a "best available offer" rule requiring lenders to put their sharpest rate on the table upfront, rather than using staggered offers to frustrate switching.
The ACCC made essentially the same 10-day recommendation in its Home Loan Price Inquiry in December 2020. That report has sat without a government response for over five years. Pannek also used the committee appearance to say the MFAA supports a more dynamic serviceability buffer – one that can flex up and down with the rate cycle rather than holding at a fixed 3 percentage point add-on.
When you refinance, your existing lender controls how quickly they release your mortgage. If they drag it out, you keep paying your old (typically higher) rate for weeks you should already be on the new deal. At an average loan size, a 20-day delay at a 0.60% rate saving costs a borrower hundreds of dollars – and that adds up to $44 million annually across the market.
BOQ's Mortgage Book Shrank 8% in a Year – Here Is What It Signals for the Market
Bank of Queensland reported its first-half FY2026 results on 23 April, revealing that its home lending book contracted by $2.24 billion – a 4% decline on the second half of FY25 – taking housing balances to $50.15 billion by February 2026. Year-on-year, the book is down 8%. The result was driven by a deliberate decision to deprioritise mortgage volume in favour of higher-margin business lending, combined with lower settlement volumes as the bank transitions origination to its new digital platform.
Performance varied significantly across the group's brands. The BOQ-branded book fell $1.7 billion, Virgin Money Australia fell $524 million, while ME Bank grew $869 million in line with the broader market. Despite this pullback, brokers still account for 55% of the total book and 71% of new home loan flows – a significant third-party channel dependency at the same time the bank is explicitly reshaping its economics toward proprietary origination. BOQ's stock fell 9% on the day the results were published.
BOQ managing director Rod Finch said the contraction was "easing" and pointed to growth returning in FY27 focused on digital proprietary and broker channels. The broader signal: mid-tier lenders under margin pressure from the big four are pulling back from price-competitive mortgage lending, which reduces options for borrowers and concentrates market share further toward the majors. Watching which lenders are growing their books – and which are retreating – is one of the most useful things a broker can do for clients in this environment.
National Values Up 9.9% Annually – But Sydney and Melbourne Are Cooling Sharply
Cotality's April 2026 Housing Chart Pack reveals a market in two distinct phases. Nationally, dwelling values are up 9.9% annually as of March – the fastest 12-month pace since June 2022 – and Australia's total residential real estate market value has reached $12.6 trillion. Regional markets have outperformed capitals, rising 11.7% annually against capitals at 9.3%. Total listed stock of 122,493 dwellings sits 15.1% below the five-year average, with new listings in the four weeks to 5 April down 3.3% on the year.
Beneath those national figures, a clear divergence has emerged. Auction clearance rates peaked at 72% nationally in September 2025, fell through the summer, briefly rebounded, and have now dropped to 52.7% in late March – the lowest level since July 2022. Sydney's clearance rate averaged 50% across April, the weakest since April 2020. Melbourne sat at 54%, its weakest reading since July 2022. Sydney and Melbourne dwelling values are each declining 0.4% over the past four weeks, while Brisbane gained 1.3% over the same period. Rental vacancy nationally sits at a tight 1.6%, with annual rental growth reaccelerating to 5.7%.
Moody's Ratings noted separately this month that Sydney new borrowers now commit 40.4% of disposable income to mortgage repayments – against a national ratio of 29.6% and figures as low as 20.9% in Darwin. Further rate hikes will push those serviceability numbers higher. The cities where affordability is most stretched are exactly the ones showing the sharpest demand pullback in the clearance data.
- The RBA's deputy governor has said the board lacks "high confidence" rates are high enough – a May hike to 4.35% is the consensus forecast from every major bank.
- Banks wrote $5.4 billion in 5% deposit loans in Q4 2025, a 63% quarterly jump – the sharpest rise on record – driven by the expanded federal 5% Deposit Scheme.
- South Australia expanded HomeStart low-deposit products with a 2% deposit option saving buyers up to $25,500 upfront; the ACT and federal governments committed $250 million to unlock 4,900 new homes for first home buyers.
- Lender discharge delays cost borrowers $44 million per year in lost savings – the MFAA is pushing for a legally mandated 10-business-day maximum refinancing discharge period.
- BOQ's home loan book contracted 8% year-on-year to $50.15 billion, with the bank explicitly prioritising higher-margin business lending over mortgage volume growth.
- National dwelling values are up 9.9% annually but Sydney and Melbourne clearance rates have hit multi-year lows, signalling that rate hike pressure is now visibly cooling demand in the most expensive markets.
Your home loan journey does not have to be overwhelming. Whether you are navigating the 5% Deposit Scheme, watching for the right moment to refinance, or trying to understand what another rate hike means for your repayments, the JRW Finance team is here to help. Book a chat at jrwfinance.com.au/meet – or find us on TikTok, Instagram, and Facebook.
- APRA Flags Rise in High-LVR Loans Under 5% Scheme – The Adviser – 24 April 2026 – https://www.theadviser.com.au/growth/48349-apra-flags-rise-in-high-lvr-loans-under-5-scheme
- SA Expands Low-Deposit Loans as ACT Unlocks FHB Houses – The Adviser – 24 April 2026 – https://www.theadviser.com.au/borrower/48351-sa-expands-low-deposit-loans-as-act-unlocks-fbh-houses
- MFAA Touts 10-Day Discharges as Productivity Fix – The Adviser – 23 April 2026 – https://www.theadviser.com.au/broker/48346-mfaa-touts-10-day-discharges-as-productivity-fix
- BOQ Mortgage Book Shrinks as Bank Eyes Proprietary Push – The Adviser – 23 April 2026 – https://www.theadviser.com.au/lender/48343-boq-mortgage-book-shrinks-as-bank-eyes-proprietary-push
- BOQ Leans Into Business Lending as Commercial Growth Accelerates – Broker Daily – 23 April 2026 – https://www.brokerdaily.au/lender/21492-boq-leans-into-business-lending-as-commercial-growth-accelerates
- Hauser Concedes RBA Unsure if Cash Rate at 'Right Level' – The Adviser – 16 April 2026 – https://www.theadviser.com.au/borrower/48316-hauser-concedes-rba-unsure-if-cash-rate-at-right-level
- Statement by the Monetary Policy Board – RBA – 17 March 2026 – https://www.rba.gov.au/media-releases/2026/mr-26-08.html
- Monthly Housing Chart Pack – April 2026 – Cotality – April 2026 – https://www.cotality.com/au/insights/articles/monthly-housing-chart-pack-april-2026
- Moody's Warns Rate Hikes to Deepen Affordability Squeeze – The Adviser – April 2026 – https://www.theadviser.com.au/borrower/48288-moody-s-warns-rate-hikes-to-deepen-affordability-squeeze
