FOR the past three months, Rasan Gujral has been in a race against rising interest rates as he looked for a house design to build.

Due to marry Raini Singh in January, he thought the race was all but lost until yesterday when the first home owners grant was tripled to $21,000 for all new constructions. It means he can now boost his deposit on a $400,000 loan from 5 to 10 per cent; and he will be able to pay off the loan faster and perhaps build their house closer to the inner west of Sydney.

"When I heard the news, I rang Raini and she said, 'What a relief - we might be able to crack a place we like.' "

His second call was to the house-design company Lily Homes. After originally deciding to delay the purchase until later in their marriage, yesterday's announcement changed his mind.

"We were worried that it's not a good time to buy," he said. "But with interest rates falling and the $21,000 [grant] it's a lot easier."

Lily Homes sales manager Joe Falanga said the announcement will provide a much needed boost.

"People have been waiting to buy [a home]," he said. "The $7000 [existing grant] didn't mean much but once you start talking about $21,000 it's different. Within a few hours we got calls.

"This industry has been going backwards for the past two years. It has been terrible. What the Government has done now will bring justice to a lot of Australians who want to get a house."

Another first home buyer, Michelle Smith, said she has put a deposit down on a house twice but had to pull out of the loans after interest rate rises.

But she will go ahead with construction of her house at Greenacre, after the twin comforts of a 0.8 percentage point fall in her bank's interest rate and the increase in the grant.

"It's a big difference once you can get to the point where you're able to put down 20 per cent deposit and avoid having to pay mortgage insurance," she said.