As housing affordability remains a key issue in the lead-up to the Federal Election, the Property Council of Australia is advocating for government support to cap interest rates for first-home buyers building new homes.

The proposed First Home Buyer Accelerator Loan Scheme would allow first-time buyers to purchase new homes or apartments with a 5% deposit, while banks would be required to cap interest rates at the higher of the official RBA cash rate or 5% for five years.

Property Council Chief Executive Mike Zorbas describes the proposal as a realistic and practical solution to support first-home buyers.

“Helping more Australians into homes should be everyone’s highest priority this coming election,” he says.

According to the Property Council, the scheme could help first-home buyers save up to $1,087 per month or $13,044 annually.

The initiative would not require upfront government spending, and with appropriate risk management measures, the financial exposure to the government would be minimal.

Beyond first-home buyer assistance, the Property Council is also calling for pro-investment policies to increase housing supply and ease pressure on the rental market.

It highlights the need for incentives to encourage investment in purpose-built student accommodation, which could help free up more rental properties for the broader market.

For mortgage lenders, such policies could drive increased demand for first-home buyer loans, while also impacting lending criteria, risk assessment, and loan structuring.

If implemented, the scheme could create new opportunities for lenders to support buyers navigating affordability challenges in a high-interest-rate environment.