The rush of first-home buyers is emerging as a bad-debt time bomb for banks, as government cash incentives for new home owners drives about a quarter of all new mortgage applications for banks.

Combined with the additional lure of low interest rates, analysts have warned that the new customers are inherently risky for banks, particularly given the likelihood of unemployment increasing in the next year.

'The confluence of artificially high housing prices, lack of a savings track record and higher unemployment risk makes the first-home buyer segment the high-risk segment within the banks' portfolio,' RBS Equities analyst Jarrod Martin said.

The Age