Albo re-elected: what’s on the board for home buyers and owners?

Two people play Monopoly on a hardwood floor handling game money and cards.

The votes have been cast and it’s clear Labor will hold the reins of federal government for another 3-year term. We look at what this may mean for first home buyers and current home owners.

As the election dust settles, it’s time to get back to business as usual.

But there could be a few changes on the horizon depending on whether you’re planning to buy a first home or you’re already a home owner.

But first, where is the property market currently at?

As we approach the mid-point of 2025, the property market is still notching up gains.

Home values nationally rose 0.3% in April, taking Australia’s median home price to a new record high of $825,349.

For that amount, mustering up a 20% deposit calls for savings of around $165,000.

But you may be able to buy with less under a number of Labor election promises and initiatives.

5% deposit scheme to be expanded

The Home Guarantee Scheme (HGS) already offers an opportunity for eligible first home buyers to get into the market with just a 5% deposit and zero lenders mortgage insurance.

From January 2026 the scheme will be expanded.

Every first home buyer will be eligible to purchase a home under the HGS, with income caps for applicants to be scrapped, property price limits to be increased, and the removal of caps on the number of people who can apply for the scheme each year.

Increased supply of new homes just for first home buyers

CoreLogic points out that first home buyer incentives often do very little to improve housing affordability.

In fact, they can push up property prices by boosting demand.

A potential long-term fix is to build more houses.

Labor has promised to help ease pressure on demand by investing $10 billion in building up to 100,000 homes reserved exclusively for first home buyers.

The Grattan Institute crunched the numbers, finding that if all 100,000 homes are built, house prices could soften by up to 2.5%, potentially offsetting any possible price increases from the expanded Home Guarantee Scheme.

Help to Buy shared equity scheme

The Albanese government has pledged to go ahead with its Help to Buy scheme for first home buyers.

The idea is that the federal government will chip in as much as 40% of the cost of a first home while buyers need as little as a 2% deposit.

Help to Buy has been a slow burn, having been part of Labor’s 2022 election platform. The delay in its rollout is partly due to each state and territory government needing to pass its own legislation to make Help to Buy a reality.

It’s a case of ‘watch this space’ to know when the scheme will finally get off the ground in your state or territory.

Current home owners can soon access cheaper batteries

One in three Australian households now have solar, but only one in forty households have a battery.

That could soon change, with current homeowners being able to access the Cheaper Home Batteries Program from 1 July 2025.

It’s hoped that the subsidy program will push down the cost of buying and installing a household solar battery by 30% – or about $4000 per battery – and help households reduce reliance on the grid.

The government estimates that homes with existing rooftop solar could save up to $1,100 on their annual power bill.

Talk to us to know how you could benefit

With a range of schemes and benefits up for grabs, it can be tricky to work out what you may or may not be eligible for.

From buying a first home, to making your current home more eco-friendly, we can guide you through the funding solutions to help you achieve your property goals.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Myth buster: do weekly repayments pay off an offset loan faster?

Pug looking inquisitive on a wooden floor with furniture in the background.

There’s a common misconception around offset account home loans that making loan repayments more frequently helps to pay off the balance much sooner. We bust that myth and reveal the real secret to harnessing the power of your offset account.

You may have heard that making repayments more frequently, say weekly instead of monthly, helps pay down a loan sooner.

That can be the case with a standard home loan.

But if you have an offset account home loan, the secret to paying off your loan sooner is maximising the balance of the linked offset account.

Let’s look at how this works.

Paying weekly or fortnightly versus monthly

A common hack to save on home loan interest is to pay half your monthly loan repayment each fortnight. Or a quarter of your monthly repayment each week.

The idea is that by paying that respective amount weekly or fortnightly, you’ll make the equivalent of an extra month’s repayment each year.

It’s a simple strategy, and the hope is that you don’t really notice the extra cash being funnelled towards your home loan.

However, if you have an offset home loan, the frequency of repayments is less important.

What really matters is having as much spare cash as possible sitting in the linked offset account – or accounts.

How to harness the power of your offset account

An offset account is an everyday account linked to your home loan.

For the purpose of monthly interest calculations, every dollar in the offset account is deducted from the balance of your loan – usually calculated on a daily basis.

So if you have $20,000 in the offset account and a home loan of $500,000, you only pay interest on $480,000 ($500,000 less $20,000).

It makes an offset account a powerful tool to reduce the loan interest you pay each month.

Better still, as your loan repayments stay the same every month, a greater proportion of your repayment goes towards paying down the loan balance (principle), rather than interest.

This further reduces each monthly interest charge.

In this way, your offset account can help you fast-track your way to mortgage freedom.

Making the most of an offset account

The golden rule to maximising the interest savings of an offset account is to keep as much money in your offset as possible. And some home loans even let you have multiple offset accounts.

Every day that your money is sitting in an offset account is another day you pay less interest on your home loan.

If you can tick this box, you’ll be using an offset account effectively, and the frequency of your home loan repayments won’t really matter.

Want to know more about offset account home loans?

Offset account home loans can come in different shapes and sizes. Some only allow you to link one offset account, with others you can link many accounts, and you may also be able to attach a debit card to your offset account/s.

If you’d like help figuring out what offset loan might be a good fit for you, get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

 

Rate cuts? Pencil them in for 2025

Put the party pies on ice and postpone those rate-cut celebrations for a while yet. The much-touted rate cuts we’ve been waiting for may not arrive until 2025. Here’s why rates could be staying higher for longer, and how to take action yourself.

June saw the Reserve Bank of Australia (RBA) keep the cash rate on ice – yet again.

Rates haven’t budged since November last year, and with the RBA not due to make another rate call until August, interest rates will remain in a holding pattern for at least two more months.

For home owners struggling to manage their home loan at current interest rates, it begs the question: ‘what happened to all the talk about rate cuts in 2024?’

Here’s what’s happening.

One reason why rates aren’t moving

Just a few months ago, some of our biggest banks were predicting interest rates would start to slide sooner rather than later.

The Commonwealth Bank and Westpac, for instance, expected rate cuts as early as September.

That’s now looking increasingly unlikely.

The reason lies with inflation.

The RBA is intent on getting inflation down to 2-3%.

Unfortunately, inflation is not playing along.

It’s currently sitting at 3.6%. So close, but not quite there.

When are rates likely to fall?

The RBA expects it could be “some time yet” before inflation is happily nestled in that 2-3% range – the point at which long-awaited rate cuts may start to kick in.

It’s not much of a date for home owners to work towards, though the big banks have a few time frames of their own.

Westpac and NAB now both see rates heading south from December. And while CommBank recently stated it expected rates to fall in November, there are signs it’s losing hope for a 2024 rate cut.

“Given the challenging underlying inflation backdrop, as well as a labour market that is loosening more gradually than expected, the runway is shortening between now and November,” CBA’s head of Australian economics, Gareth Aird, said.

“The risk to our call is increasingly moving towards a later day for an easing cycle.”

Meanwhile, ANZ doesn’t expect a rate cut before 2025. Ditto Citi economists and a growing number of other experts.

Long story short, even if we do get a December 2024 RBA rate cut, it’s probably fair to say we won’t see those cuts flow through to home loans until early next year.

And a note of caution: the RBA mentioned in its June statement that it is “not ruling anything in or out”.

It’s a grim reminder that a rate cut is not guaranteed before another rate hike.

This is why it’s so important to take action of your own.

How to manage higher rates

Revisiting your household budget, identifying areas where you can cut back, and tucking spare cash into an offset account to save on loan interest are all steps worth considering.

And don’t forget, tax cuts for 13.6 million Australians kick in from 1 July.

That could provide extra cash each pay day to help pay off your home loan.

It’s also a good idea to speak to us for a home loan review.

We can let you know if you still have the loan that’s right for your needs, or if you could save by switching – without having to wait for RBA rate cuts.

Better still, rising national property values may mean you could be in a great position to refinance.

Talk to us today for more tips on managing your home loan repayments and possibly trimming your loan rate. It may mean the party pies can come out sooner!

 

Disclaimer:

The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.