Credit card demand jumped 15.3% year-over-year, signalling Australians are using plastic to bridge daily cash flow gaps. New Equifax data reveals how households are turning to credit to manage affordability pressures.
What’s happening: Equifax consumer credit data for December 2025 reveals a surge in mortgage demand up 17.9% year-over-year and the highest enquiry volumes in three years. Secured credit demand rose 14.1% annually, while unsecured credit climbed 5.3%.
Why this matters: These figures signal shifting consumer behaviour during economic transition. First home buyers gaining faster market access will inject demand into outer suburbs and regional markets, potentially driving property valuations higher.
December 2025 delivered a watershed moment for Australia’s housing market. First-time-home-buyer mortgage-seeking activity showed promising year-over-year growth, with new mortgage enquiries climbing 17.9% compared to the same month in 2024. More telling still: December saw the highest volume of mortgage demand across the entire three-year tracking period from December 2022 to December 2024.
Kevin James, Chief Solution Officer at Equifax, points to two specific catalysts. “The Equifax Consumer Market Pulse December data shows that mortgage demand reached a three-year high in 2025, up 17.9% year-on-year, a surge that I see was heavily influenced by both the expanded First Home Buyer 5% deposit scheme, and the three cash rate cuts we saw over last year,” James explains.
The timing matters. From 1 October 2025, the Scheme enables eligible first home buyers to purchase a home with a deposit as low as 5%, and single parents or legal guardians with a deposit as low as 2%, without the need to pay Lenders Mortgage Insurance. The removal of income caps and unlimited scheme places from October has turbocharged activity. Buyers who previously faced barriers now have a clearer path to ownership.
But momentum is fragile. “The momentum shows FHBs rushing to utilise the deposit scheme, however this trend will likely be sensitive to the cash rate in 2026. If rates hold or drop, we could expect this energy to carry well into 2026; however, any rate hikes could see this stalled,” James cautions.
The Refinance Revolution
While new first home buyers dominate the headlines, a more dramatic story is unfolding in the refinance market. Refinance enquiries represented 36% of all mortgage demand in December, revealing that existing borrowers are aggressively hunting for value. This is not passive behaviour.
“With 36% of all mortgage demand in December 2025 driven by refinancing, it is a good indication that existing borrowers are aggressively hunting for value. This activity could suggest that mortgage holders are acting now to protect themselves against any potential cash rate uncertainty as we move further into 2026. They aren’t waiting to see what happens; they are actively securing a financial position now,” James observes.
Refinance upgrades with the same lender surged 21.7% year-over-year. Yet the more striking shift involves borrowers switching lenders entirely. Since its inception in 2020, the Scheme has supported more than 240,000 Australians into home ownership. Its reach has grown substantially, supporting over 1 in 3 first homebuyers nationally in 2024–25, compared to 1 in 10 in its first full year of operation.
The data reveals an interesting divergence. Equifax figures show that new mortgage enquiries with Big 4 banks surged 27% year-over-year, and mutual lenders climbed 39%. However, these familiar institutions command the initial purchase. The dynamic flips for refinancing. Non-bank lenders captured 40% growth in refinance switching, while Tier 2 banks grew 18%.
“We are seeing an interesting divergence in consumer behaviour depending on whether they are buying or switching. For new mortgages, there is a preference for familiar brands, with enquiries for Mutuals and Big 4 Banks surging year-on-year, while Tier 2 and Fintech lenders saw declines. It seems that when taking out that initial large debt, Australians are gravitating toward perceived safety,” James explains.
“However, the dynamic flips for refinancing. Large non-bank lenders and Tier 2 banks showed significant growth against themselves year-over-year. These lenders appear to be successfully scooping up the switching market, attracting established borrowers who are confident enough to look beyond the major banks for a better deal,” he adds.
Queensland, Western Australia, and New South Wales led mortgage demand growth in December.
Unsecured Credit Tells a Deeper Story
Beneath the mortgage boom, unsecured credit is painting a more concerning picture. Credit card demand surged 15.3% year-over-year in December, whilst personal loan enquiries climbed 10.4%, both reaching the highest December levels in three years. Buy Now Pay Later (BNPL) demand, however, contracted sharply by 21.2%.
This isn’t simply seasonal festive spending. The numbers point to households managing everyday affordability pressures through credit.
“December 2025 recorded the highest level of Personal Loan demand we have seen for a December period in three years. With demand up 10.4% year-on-year, alongside a significant 15.3% surge in Credit Card enquiries, it’s clear that Australian households were actively seeking credit to manage the holiday season,” James states.
But deeper transaction data reveals the real story. “However, this isn’t just about accessing new funds; it represents a deeper consumer reliance on credit. Banking transaction data comparing October 2025 to October 2024 reveals that the average amount spent on credit card payments jumped significantly by 35%. To me, this signals that consumers aren’t just opening these accounts for a rainy day, they are leaning on credit to bridge gaps in their daily cash flow.”
33% of Australians said they use credit cards, and 24% use Buy Now, Pay Later (BNPL) services. Among younger Australians, BNPL is even more prevalent with 38% of Gen Z nominating it as their preferred way to manage costs.
The contraction in BNPL demand by 21.2% suggests consumers are consolidating their borrowing towards traditional credit cards and personal loans, perhaps seeking stability during uncertain times. This consolidation signals neither confidence nor optimism. It signals households making difficult choices about how to stretch tight budgets.
Which Lenders Are Winning
The regional picture is equally significant. Queensland, Western Australia, and New South Wales dominated mortgage growth in December, reflecting the uneven impact of affordability pressures across Australia. Some markets are responding vigorously to the deposit scheme expansion; others remain cautious.
Within the lending ecosystem, the winners are emerging clearly. Non-bank lenders are capturing refinancers who want better value. Mutual banks are gaining ground, particularly among first home buyers seeking alternatives to Big 4 institutions. Yet Big 4 banks continue to hold initial new purchase business, a testament to the perception of safety and stability they offer to first-time borrowers entering the largest financial commitment of their lives.
Fintech lenders, by contrast, saw new mortgage enquiries decline 23%, suggesting that cutting-edge branding carries less weight when the stakes are this high.
The auto lending market tells its own story. Year-over-year, auto loan enquiries contracted 1.3%, with December declining a further 4.3% month-on-month despite traditional end-of-year sales events. High interest rates continue to bite, and for most households, vehicle replacement remains a deferrable expense in a climate of competing financial pressures.
Looking Ahead
What emerges from Equifax’s December data is a market in transition. First home buyers are mobilising the most significant housing policy shift in years. Existing borrowers are acting proactively to secure financial positions before rate uncertainty crystallises. Yet simultaneously, households are leaning more heavily on credit to manage daily living costs.
This is not a market buoyant with confidence. It is a market of deliberate actors making calculated moves within structural constraints. The mortgage momentum is real. So too is the growing reliance on unsecured credit. Both trends coexist. Both matter.
