Young borrowers are flocking to outer city suburbs and regional Australia to get into the property market, says National Australia Bank. Lending data from the bank confirms a surge in activity by first-time buyers, who are taking advantage of high levels of government assistance and cheap finance.

NAB is one of the two major banks that were assigned FHB deposit places under the Federal Government scheme which allows a FHB to secure a mortgage with a 5% deposit without need to obtain lenders mortgage insurance.

The bank found in the three months ending 31 October, housing finance for FHBs rose 21% compared with the previous period, with the strongest demand in Western Australia, Queensland and regional NSW. On a national level, metropolitan first-home buying grew 17% over the period, while regional uptake grew 44%. Their activity is driving house prices higher in many regional centres across Australia.

NAB executive Andy Kerr says the mortgage rush from FHBs is at a level not seen in more than a decade.