Could rising interest rates actually help first home buyers?
Key takeaways
- 36% of 18–39-year-olds think they'll never own a home, up from 13% in 2019.
- Higher interest rates could force more sellers into the market and push property prices lower.
- This potentially creates opportunities for some first-home buyers, provided you qualify for a mortgage.
For millions of Australians, owning a home feels more like a fantasy than a financial goal.
Finder's Consumer Sentiment Tracker shows 36% of Australians aged 18 to 39 now think they'll never actually own a home.
That's almost 3 times more than in 2019, when just 13% said they expected to miss out on home ownership.
The Reerve Bank just lifted the cash rate to 4.60% – its fourth rate rise of 2026 – and warned it could raise rates again if needed to bring inflation under control.
And for first-home buyers, this could be great news.
Plot twist as property prices fall
Higher interest rates can push property prices down.
Australian home prices have already fallen for 5 consecutive months, with national prices sitting 2.7% below their March peak (as of August).
Today's inflation figures have delivered another blow to the housing market. Annual inflation has climbed to 4% in August, up from 3.5% in July.
Could higher interest rates and falling property prices give some first-home buyers a chance to get into the market?
Cheaper property prices – but can you get a loan?
Now, cheaper property prices doesn't automatically mean cheaper home ownership.
Higher interest rates reduce how much a bank is willing to lend.
So, a buyer might be able to afford a property when prices call, but still struggle to get the mortgage required to buy it.
But provided you have access to a home loan and you can afford the repayments, this could be your moment.
In a nutshell, higher interest rates could mean
- Falling property prices
- Lower borrowing capacity
- Higher mortgage repayments
- More stock/more choice, as sellers list due to unaffordability
- Tougher conditions for buyers and sellers, depending on your personal situation.
The next phase of the property downturn may be less about houses getting cheaper, and more about access to finance.
For some first-home buyers, falling prices could create an opportunity to buy that seemed impossible a year ago.
For others, higher rates could mean they remain locked out, even as the price of the home they want falls.
You could be eligible for tens of thousands in grants, schemes and discounts: check out our First Home Buyer Hub
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