How a Rate Cut Could Boost Your Borrowing Power in 2025

With potential rate cuts on the horizon and the first home buyer price cap possibly rising to $950,000, 2025 could be the year you finally buy. Keep reading to find out how the Reserve Bank and recent government proposals could shape your mortgage this year.

Buying your first home is one of life’s biggest milestones - a journey that requires confidence, clarity, and support. At Carlisle Homes, we’re here to make this process as straightforward and empowering as possible.

The Reserve Bank is considering a 0.25%- 0.50% interest rate cut, which could be welcome news for prospective homebuyers in 2025. But what would this mean for your borrowing power and mortgage repayments if it goes ahead?

Boosted Borrowing Power: More Home Within Reach

A 0.25% rate cut could make a real difference. For many buyers, it might increase borrowing capacity by around $16,000. If the cut were 0.50%, that figure could rise to approximately $33,000.

What does that mean in practice? More options, better choices, and a greater chance to secure a home that truly fits your lifestyle and aspirations.

Lower Monthly Repayments: More Financial Flexibility

For an $800,000 loan over 30 years, a 0.25% rate cut could save you about $127 per month on repayments. If rates dropped by 0.50%, your monthly repayments might fall by $254.

This extra cash could free up your finances—whether it’s for home improvements, savings, or just peace of mind.

Additional Support for First Home Buyers: Expanded Borrowing Power and Greater Scheme Accessibility

Recent changes aim to make it easier for first home buyers to enter the market. For example, Commonwealth Bank may offer an allowance of $150 per week for those renting out or boarding a room, potentially increasing borrowing power by around $50,000.

Updated HELP/HECS debt policies could also lessen the impact of student loans on borrowing capacity, adding another $50,000 to what you can borrow.

Meanwhile, enhancements to the First Home Guarantee scheme have raised the property price cap from $800,000 to $950,000 and removed income caps, broadening eligibility and opening the scheme to more buyers.

The Federal Government’s Proposed 5% Deposit Scheme

Labor has proposed a new 5% Deposit Scheme that could significantly expand the First Home Guarantee program. If implemented, it would remove existing income limits and place caps, making the scheme accessible to all eligible first-home buyers.

Property price caps would also be adjusted to reflect average prices in each city and region, supporting buyers in higher-cost areas.

By lowering the deposit requirement to just 5% and removing the need for Lenders Mortgage Insurance, this initiative aims to reduce barriers and help more Australians enter the property market sooner.

What’s Next? A Growing Opportunity for Home Ownership

At Carlisle Homes, we know buying a home is a major milestone full of questions and decisions. That’s why our dedicated sales consultants are here to help you navigate the evolving property landscape and any new opportunities that arise.

From your initial consultation to the moment you step into your new home, we provide personalised guidance, expert advice, and clear communication to make your journey simpler, more confident, and truly rewarding.