Australia’s housing market is experiencing an unprecedented surge in home loan applications, driven by three consecutive interest rate cuts in 2025 that have significantly boosted buyers’ borrowing power.
According to recent data from Commonwealth Bank and PRD Nationwide’s Time to Buy a Dwelling Index, conditional preapprovals have soared to their highest levels since the pandemic.
Increased Borrowing Capacity
The 0.25 percentage point rate cuts have increased borrowing capacity by approximately 7%, enabling households with a $200,000 combined income to borrow over $1 million—a threshold previously out of reach. CommBank reports that online preapproval applications can be completed in just 10 minutes and remain valid for 90 days with easy renewal options.
Significant Gains Across States
The Time to Buy a Dwelling Index rose 37% nationally over the past year, with Tasmania experiencing the largest jump (+113.5%), while Western Australia reached its highest level since 2021 (+39.2%). Sydney and Brisbane also saw notable increases, with the average loan amount for first-time buyers rising to $546,000.
Challenges Ahead
PRD Nationwide chief economist Dr Diaswati Mardiasmowarns that rising demand may lead to higher property prices and increased household debt. She advises buyers to consider alternative locations or housing types, such as townhouses or units, which remain 30-35% cheaper than detached houses. The surge in activity reflects a renewed confidence among Australians returning to the property market.
