Is the Australian Homeownership Dream Fading? What Rising Mortgage Rates Mean for Buyers in 2026
New research reveals a troubling trend: a growing number of Australians are walking away from the dream of homeownership altogether. With mortgage rates climbing and property prices remaining stubbornly high, the path to buying a first home — or even an investment property — is narrowing for many households.
As a licensed mortgage broker working with borrowers across Australia every day, Finance Hub & Networks (FinHub) sees firsthand how these market shifts affect real families. Here’s what the latest data tells us — and what options may still be available.
40% of Non-Owners Have Given Up on Buying
According to Agile Market Intelligence’s latest Consumer Pulse survey (Q1 2026), four in ten Australians who don’t currently own a home have no plans to purchase one. That figure has risen by three percentage points in just one quarter and is 10% higher than in March 2025.
Only 13% of non-homeowners say they intend to buy in the next 12 months — down from 15% at the end of 2025. Meanwhile, 46% still aspire to own a home but feel financially unable to take the step, citing high mortgage rates and elevated property prices as the main barriers.
These findings align with a separate Youi survey showing 46% of Australians believe they may never be able to afford a home, and PropTrack data indicating a typical household can now afford just 15% of homes sold nationally — down from 43% four years ago when rates were at record lows.
Which Age Groups Are Most Affected?
The retreat from homeownership is sharpest among older Australians. Among non-owners aged 35–54, 40% now say they have no plans to buy (up from 33% last quarter), and only 15% in this group plan to purchase within a year. For those aged 55 and over, a striking 74% have given up on the prospect entirely.
Younger Australians (18–34) remain the most active cohort, with 19% aiming to buy within 12 months — but even this group has pulled back slightly since late 2025.
How Rate Rises Are Shrinking Borrowing Power
The Reserve Bank of Australia lifted the cash rate twice in early 2026, bringing it to 4.10%. Canstar analysis shows the March hike alone cut maximum borrowing capacity by approximately $12,000 for a single average-income borrower and around $24,000 for a dual-income couple. Combined, the two 2026 increases have reduced capacity by roughly $25,000 and $49,000 respectively.
At a state level, the impact varies. In NSW, just 13% of non-owners plan to buy in the next year — a five-point drop quarter-on-quarter. Queensland has the highest share of non-owners who have abandoned plans to buy at 44%. In South Australia and Western Australia, many would-be buyers want to purchase but feel current rates and prices are out of reach.
It’s important to note that interest rate movements affect borrowers differently depending on loan size, loan type, and individual financial circumstances. A rate rise that significantly impacts one household may have a smaller effect on another.
What Can Prospective Buyers Do?
While the current market presents real challenges, there are several avenues worth exploring:
- Government schemes: The expanded 5% deposit Home Guarantee Scheme has helped over 300,000 Australians into homeownership with a smaller deposit. Eligibility criteria apply, and it’s worth checking whether you qualify.
- Reviewing your borrowing position: Every borrower’s situation is different. Speaking with a licensed broker can help you understand your actual borrowing capacity across multiple lenders — not just one bank’s assessment.
- Exploring different loan structures: Different loan types — variable, fixed, split, offset — carry different risks and benefits depending on your circumstances. Understanding the trade-offs is an important part of making an informed decision.
- Considering timing and location: Market conditions vary significantly across cities and regions. What’s unaffordable in Sydney may look different in Adelaide or regional centres.
However, it’s equally important to understand the risks. Taking on a mortgage in a rising-rate environment means repayments could increase further. Borrowers should ensure they have adequate buffers and consider how potential future rate changes might affect their ability to meet repayments.
Frequently Asked Questions
How much has borrowing power decreased in 2026?
Following the RBA’s two cash rate increases in early 2026 (bringing the rate to 4.10%), Canstar estimates that a single borrower on the average full-time wage has lost approximately $25,000 in maximum borrowing capacity, while a dual-income couple has lost roughly $49,000. Individual results depend on your income, debts, and lender assessment criteria.
What percentage of Australians have given up on buying a home?
According to Agile Market Intelligence’s Q1 2026 Consumer Pulse survey, 40% of non-homeowners now have no plans to purchase a property. A separate Youi survey found 46% of Australians believe they may never be able to afford a home. These figures reflect the combined impact of higher mortgage rates and elevated property prices.
Can a mortgage broker help if I’m struggling with affordability?
A licensed mortgage broker can assess your individual financial position and compare options across multiple lenders — which may include products or structures you hadn’t considered. Brokers can also help you understand government schemes you may be eligible for. However, every situation is different, and there’s no one-size-fits-all solution. A thorough review of your finances is the first step.
Are interest rates expected to keep rising in 2026?
Several major banks have forecast further rate increases in 2026, with some predicting the cash rate could reach 4.35% or higher. However, rate forecasts are inherently uncertain and depend on inflation trends, global economic conditions, and RBA policy decisions. Borrowers should consider their capacity to manage repayments under a range of scenarios.
What is the 5% deposit Home Guarantee Scheme?
The Australian Government’s Home Guarantee Scheme allows eligible first-home buyers to purchase with a deposit as low as 5% without paying Lenders Mortgage Insurance (LMI). Eligibility criteria include income thresholds and property price caps that vary by location. A licensed broker can help determine whether you qualify and guide you through the application process.
Take the First Step — Explore Your Options
If you’re wondering where you stand in today’s market, speaking with a licensed mortgage broker can help clarify your position. Finance Hub & Networks (FinHub) compares options across 35+ lenders to help you find a loan that suits your individual circumstances.
Contact Daniel Nguyen at FinHub — call 0480 03 03 03 or visit finhub.net.au for a no-obligation consultation.
Finance Hub & Networks Pty Ltd — Australian Credit Licence 573164.
Your full financial situation would need to be reviewed prior to acceptance of any offer or product.
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