Great Southern Bank has launched mortgages spanning a decade more than the industry average in a bid to help struggling first home owners enter the market.
In what could be a beacon of hope for young Australians locked out of the housing market, the customer-owned bank is offering 40-year home loans to first-time buyers.
But such commitment comes at a cost – stretching a mortgage over an additional decade could see borrowers paying tens of thousands more in interest.
Despite this, many Australians appear open to the idea.
Nearly one in three Gen Z and Millennials and one in five Gen Xs would consider taking out a 40-year home loan if it meant lower repayments, according to 1,000 Australians surveyed by the bank in June.
“For some Australians having lower monthly repayments is the difference between renting and buying their first home,” Great Southern Bank chief customer officer Rolf Stromsoe said.
“This could be their ‘starter home loan’ – exactly what they need to get their foot in the door at the beginning of their home ownership journey.”
The longer loan terms are available on Great Southern Bank’s variable rate home loan products, which currently offer rates starting at 5.39% p.a. (5.45% p.a. comparison rate*).
How much more could borrowers pay?
Here’s how extending a loan term could impact the short- and long-term financial position of a person borrowing $600,000 at a constant interest rate of 5.50% p.a.:
Loan term
Monthly repayment
Total interest over life of loan
25 years
$3,685
$505,357
30 years
$3,407
$626,424
40 years
$3,095
$885,418
Lower repayments also boost borrowing capacity.
A single Australian earning around $80,000 after tax could see their borrowing power rise by almost $60,000 under a 40-year term compared with a 25-year loan:
Loan term
Estimated borrowing power
25 years
$606,000
30 years
$634,000
40 years
$665,000
Giant among 40-year home loan providers
Great Southern Bank holds more than $17.4 billion of home loans on its books, according to the latest Australian Prudential Regulation Authority (APRA) data.
That makes it Australia’s third most prominent customer-owned mortgage provider, behind what will soon be People First Bank (the entity combining Heritage Bank and People’s Choice) and Newcastle Permanent.
It’s also the largest lender outwardly offering 40-year mortgages, joining Pepper Money, while the likes of RACQ Bank and Unity Bank advertise such terms for first home buyers.
40-year mortgages a solution to the housing affordability crisis?
While market conditions are improving for first home buyers, many continue to face significant challenges.
Housing affordability hit a 30 year low over the last 12 months, with an average household needing to save for nearly six years to secure a 20% deposit on a median-priced property, according to the PropTrack CommBank First-Home Buyer Report 2025.
It found a household renting their home and earning $129,000 annually could afford to buy just 17% of homes sold in the past year.
“The main thing is just getting into the market,” economist, mortgage broker, and founder of It’s Simple Finance Joseph Daoud told YourMortgage.com.au.
Image: Joseph Daoud
“If you’re strategic about where you buy and you’re confident that the property market in that area is going to grow, then [taking out a 40-year home loan] is a fantastic solution.
Both Mr Daoud and Great Southern Bank note that a borrower signing up for a 40-year home loan today doesn’t need to hold that loan over the longer-term.
“You can always refinance into a 30-year loan later,” Mr Daoud said.
“I’ve done this with clients before … I signed one couple up to a 40-year mortgage so they could buy sooner and within nine months, after the property grew in value, we refinanced them into a 30-year loan with a major bank.
“In that time, their property’s value went up by $150,000.”
Though, there is also the risk that property values will fall, leaving borrowers signing onto a 40-year home loan today mortgage trapped – meaning their home loan’s principal balance is greater than their property’s value – and unable to refinance or sell and be mortgage free.
For first home buyers not willing to take on a 40-year mortgage, rate cuts and policy changes, including imminent changes to the Home Guarantee Scheme, may offer another glimmer of hope.
“The good news for first-home buyers is that conditions are improving,” REA Group senior economist Angus Moore said in early September.
“Interest rates have already fallen from their peak, and further cuts are expected [and] while home prices are rising, lower mortgage rates will likely help put more homes within reach of first-home buyers.”
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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Extra Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
5.29% p.a.
5.33% p.a.
$2,773
Principal & Interest
Variable
$0
$530
90%
- Available for purchase or refinance, min 10% deposit needed to qualify.
- No application, ongoing monthly or annual fees.
- Dedicated loan specialist throughout the loan application.
Compare
Promoted
Disclosure
5.24% p.a.
5.15% p.a.
$2,758
Principal & Interest
Variable
$0
$0
80%
- A low-rate variable home loan from a 100% online lender.
- Backed by the Commonwealth Bank.
Compare
Disclosure
5.39% p.a.
5.43% p.a.
$2,805
Principal & Interest
Variable
$0
$530
90%
- Available for purchase or refinance, min 10% deposit needed to qualify.
- No application, ongoing monthly or annual fees.
- Quick and easy online application process.
Compare
Promoted
Disclosure
Important Information and Comparison Rate Warning
Important Information and Comparison Rate Warning
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