Left with $0 in the bank: Homebuyers take a risky gamble – realestate.com.au

First-home buyers are pouring every dollar in their name into their purchases, with experts warning their leftover savings are a gamble that adds to growing risks to the housing market.

A Finder report found that almost half of first home buyers surveyed nationally went over their budget, up from 38 percent in 2022, as rising prices put pressure on them to spend more.

An increasing number of people who have overspent say they have spent all their savings on their properties.

According to the Finder research, first-home buyers in this category were about half of those who exceeded their target budget in the past year.

Finder noted that the main driver of this trend was the rapid increase in house prices, which meant that the budgets that first-home buyers had at the start of their homebuying journey quickly became too tight.

House prices in Sydney rose by an average of $121,000 over the year to December, while unit prices rose by an average of $52,000, PropTrack figures showed.

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Buyer demand far exceeds supply. Photo Thomas Lisson

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A situation has emerged where homebuyers are being urged to put more of their savings into their purchases to keep up with extreme price increases or risk being locked out of the market.

Finder home loan expert Richard Whitten said it is a dangerous position for first home buyers.

“Buying a house with no savings left means you’re in for a lean few years as you make your repayments and try to put a little extra aside,” he said.

“Contingency costs can hit any of us at any time, and a buyer in this position will be unprepared.”

Mr Whitten added that a glut of first home buyers with no savings could be problematic for the wider market in an environment where rate hikes are no longer off the table.

“If interest rates rise in 2026, which is possible, a buyer with no savings will struggle to save more as their repayments continue to rise,” he said.

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Three of the four major banks now say we are at the end of the rate cut cycle. Image: NCA Newswire

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This week ANZ joined NAB and CBA in revising previous forecasts of more rate cuts in 2026, saying it expected no further cuts in the near future.

Half of 28 economists polled in a monthly Finder survey of consumer confidence agreed, saying they expected no more cuts. A third say that an interest rate increase is expected in the next six months.

Geoffrey Kingston of Macquarie University Business School said the Reserve Bank was likely to “sit on its hands” at its next board meeting on Tuesday, but added that “we are likely to see one or two increases in cash rates in 2026”.

My housing market economist Andrew Wilson said the RBA “could make some tough decisions in 2026 if inflation continues to rise as expected and the recent modest weakening in the labor market intensifies”.

Sydney couple Jitin and Anupama Vyas said they were now in a comfortable position, but felt pressure to spend more when looking for a home.

“If you’re looking for a property in Sydney, you don’t really like anything because what you do like you can’t own because it’s out of your reach,” Mr Vyas said. “We found something we liked in Cherrybrook, so we wanted to do it even though it was a lot of work.”

They were contacted by their mortgage broker after six months in their new home, when Mr Vyas said they felt “stretched” by their mortgage.

“After the mortgage, there were a few rate cuts, but they didn’t help much,” he said. “Anything, even a drop of $100 would help us.”

Jitin Vyas pictured at his home in Cherrybrook with wife Anupama and children Dhriti and Avyukt. Photo: Monique Harmer

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Mortgage Choice broker Terence Hammond helped them refinance their loan and said it was “good practice” for homeowners to review their loan every six to 12 months.

“It’s also worth reviewing when your circumstances change, whether it’s financial or product related,” he said. “Don’t expect your bank to call you out of the blue and offer you a cheaper rate.”

– With additional reporting by Owen Raymond