Nearly half of all first home buyers are now entering the property market without a 20% deposit. That's the highest level since records began, and almost double the rate we saw a decade ago. It's a striking number, and it deserves more than a reassuring shrug from the Reserve Bank.

The data is clear. In 2015, around 6300 first home buyers purchased with a low deposit. By 2025 that number had more than doubled to nearly 14,000. The Reserve Bank's decision to allow banks to direct 25% of new owner-occupier lending to sub-20% deposit buyers (up from a tight 10% in early 2023) has opened the floodgates.

Yes, flat house prices mean today's low-deposit buyers face less immediate risk of negative equity. And yes, relaxed LVR rules have helped more buyers get in without leaning on the bank of mum and dad. Those are real positives.

But let's be honest about what's also happening here.

The 20% deposit requirement was never just a bureaucratic hurdle. It was a circuit breaker. It forced savings discipline, created a buffer against falling values, and gave the broader economy a degree of resilience that helped us navigate recent downturns without the kind of catastrophic mortgage defaults seen in other countries. That expectation mattered.

Softening those rules, at a time when interest rates are tipped to rise through the second half of this year and potentially into 2027, puts the most stretched borrowers in the most exposed position. Low-deposit lending carries higher rates and low-equity fees. Borrowers who stretched to get in during a flat market could find themselves squeezed hard as repayments climb.

The Reserve Bank notes that less than 10% of total outstanding lending sits above an 80% LVR. Across the whole system, risk looks manageable. But system-wide risk and individual household risk are very different things. The GFC didn't start because every borrower defaulted. It started because enough of them did.

A hard line on deposit requirements isn't punishing aspiring homeowners. It's protecting them, and the broader economy, from a lolly scramble mentality that history has already shown us doesn't end well.

The question worth asking is whether we're learning from the past, or quietly repeating it.