New research from Money.com.au, reported by news.com.au, is prompting calls for Australian mortgage brokers to sharpen conversations about upfront purchase costs, as more buyers capitalise stamp duty and fees into their loans without understanding the long-term interest hit. Money.com.au found around half of Australian buyers are increasing their home loan to cover government charges and transaction costs such as stamp duty, conveyancing, and settlement fees, rather than paying them from savings. Within this group, 28% capitalised all upfront costs, while 18% borrowed extra to fund stamp duty alone.

Money.com.au mortgage expert Debbie Hays said the combination of high prices and stretched deposits is pushing more borrowers into this strategy.

"If you're a first-home buyer who doesn't qualify for an exemption, stamp duty and buying fees can feel like paying a second deposit," Hays said. "Many of those young buyers then roll those taxes and fees into their mortgage and take on a bigger debt than they originally planned. "The real sting in the tail is you'll pay interest on that extra amount over a 30-year term, because stamp duty and fees become part of your loan balance. Sometimes financing those upfront costs is the only way people can buy a home, but buyers should have a plan to reduce the interest, like using an offset account or redraw."

How capitalising stamp duty becomes a six-figure hit

The research highlights just how brutal that extra interest bill can be. Based on median dwelling values and a 30‑year loan at an average variable rate of 5.49% p.a., the total cost of capitalising stamp duty can exceed $100,000 in several capitals.

In Adelaide, the extra interest lifts the total by about $108,923; in Sydney it's $103,698 and in Melbourne $98,451, with Brisbane, Perth, and regional markets also facing sizeable five‑figure sums.

Younger buyers are the most likely to lean on this approach, with nearly two‑thirds of Gen Z purchasers and more than half of Millennials increasing their loan to cover upfront costs.

KPMG analysis shows the share of homes affordable to an average first-home buyer household has collapsed from about 30% of the housing stock in 2019–20 to just 12% in 2024–25, underscoring why so many younger borrowers feel they must stretch by capitalising stamp duty and fees simply to get into the market.