Loan Volumes Break Through a Three-Year Ceiling

Victoria recorded over 43,000 new loans in Q4 2025. That is the first time quarterly activity has cleared 40,000 since June 2022, and the third highest single quarter result in over a decade. Importantly, the lift was broad based across all buyer types, not concentrated in one segment of the market.

The 5% Deposit Scheme 

The federal 5% Deposit Scheme was a key driver of the surge. From 1 October 2025, available places became uncapped, income thresholds were removed, and price caps were raised. In Victoria, the scheme now covers properties up to $950,000, which captures a large share of medium and higher density dwellings across metropolitan Melbourne, as well as detached houses in middle and outer ring suburbs.

Confidence at the lower end of the market flowed through to broader activity, lifting sentiment and loan volumes well beyond the first home buyer segment alone.

Investors Hit a Record Share of the Market

Investor loans reached a record high in Q4 2025, accounting for 36% of all loans written for the quarter. That is a significant figure and reflects how quickly sentiment shifted once the broader policy and rate environment became more favourable.

First home buyers held at exactly a quarter of total activity. Their share dipped slightly despite rising in absolute numbers, which gives some sense of just how much investor and subsequent buyer activity lifted around them.

Loan Sizes Are at Record Highs Across the Board

Average loan sizes reached record highs across all buyer types in Q4 2025, but the most significant movement was among first home buyers.

After years of relative stagnation between 2021 and 2023 and only modest gains since, first home buyer average loan sizes jumped sharply to $561,000 in Q4 2025, up 7.4% compared to the same quarter a year prior. The 5% Deposit Scheme was the clear catalyst, enabling buyers to enter the market sooner and at higher price points than would otherwise have been possible.

Subsequent home buyers saw the largest dollar jump, with average loan sizes rising nearly $50,000 to $752,000, a 6.6% increase from Q4 2024. This points to a meaningful shift in sentiment in the middle and upper markets, with buyers appearing to trade up using stronger sale proceeds from existing homes alongside larger loans.

Investor loans averaged $617,000 in Q4 2025, up 2.1% year on year. Given that investors are typically more sensitive to pricing due to yield and return considerations, even a modest uplift is notable, particularly where it is not supported by corresponding rental growth.

 

What This Tells Us

Q4 2025 was not just a strong quarter for loan volumes. It reflected a genuine shift in what buyers were willing and able to commit to. Policy changes lowered the barrier to entry, sentiment improved across the board, and the result was the kind of broad based activity that tends to have lasting effects on price expectations and supply demand dynamics.

Want the Full Picture?

This article draws on findings from RPM Group’s VIC Apartments & Townhomes Market Report. Access the complete data and market forecasts in the full report.