The Australian Federal Budget, handed down on 25 March 2025, includes several significant changes that will impact homeowners, first home buyers, investors, small businesses, and the housing sector in general. We’ve broken down the key points relevant to the mortgage and housing industry.
Key Changes for Mortgages
- Expansion of Help to Buy Scheme
The government has committed an additional $800 million to the Help to Buy scheme. This will increase property price and income caps:
- Individuals: From $90,000 to $100,000.
- Joint Applicants and Single Parents: From $120,000 to $160,000. With a total of $6.3 billion allocated, the scheme will now help 40,000 Australians by making mortgages more accessible and reducing the need for large deposits.
- Foreign Buyers Ban
Starting 1 April 2025, foreign buyers will be prohibited from purchasing existing residential properties. The government has allocated $5.7 million to the ATO to enforce this ban. Additionally, $8.9 million will be used to target land banking by foreign buyers and ensure vacant land is put to productive use. - Home Guarantee Scheme (HGS) Updates
The Home Guarantee Scheme continues to support eligible buyers with low deposit requirements. For the 2024-2025 financial year, the following places are available:
- First Home Guarantee (FHBG): 35,000 places for homebuyers with as little as 5% deposit.
- Regional First Home Buyer Guarantee (RFHBG): 10,000 places for regional buyers with a 5% deposit.
- Family Home Guarantee (FHG): 5,000 places for eligible single parents and guardians with a 2% deposit. Eligibility criteria include a maximum income of $125,000 for singles and $200,000 for joint applicants. Applicants must be Australian citizens or permanent residents and purchasing the home as an owner-occupier.
- HECS-HELP Debt Changes
Under the new budget, HECS-HELP debt will no longer affect mortgage serviceability assessments if the borrower is expected to repay the debt in a reasonable timeframe. This change is set to make home loans more accessible for graduates with student debt.
Regional Banking Support
To support Australians in regional areas, the major banks have committed to keeping 800+ regional branches open until at least 31 July 2027. Additionally, $56.7 million will be invested into the Bank@Post service to assist over 1,800 regional and remote communities.
Support for Small and Medium Enterprises (SMEs)
The federal budget includes several provisions for SMEs, such as:
- Energy Bill Relief: An extension of the energy bill relief until the end of 2025, saving around 1 million SMEs an average of $150 each.
- Energy Efficiency Grants: $56.7 million will be allocated for energy efficiency upgrades, offering up to $25,000 for over 2,400 businesses.
- Hospitality Sector Support: A pause on the indexation of beer and rebates for alcohol manufacturing, expected to save Australians $165 million over five years.
- Tax Cuts for Sole Traders: Around 1.5 million sole traders will benefit from tax cuts.
- Cybersecurity Support: $60 million will be allocated to strengthen small business cybersecurity awareness.
Construction Industry Support
The government has announced $10,000 in financial incentives for eligible housing construction apprentices starting from 1 July 2025. This initiative aims to help address the housing shortfall and support the goal of building 1.2 million homes by 2029. Additionally, the government is investing $54 million to boost prefabricated and modular home construction.
Housing and Renters’ Support
- Rent Assistance for Low-Income Households
The government has committed to increasing rent assistance by 45% for around 1 million households, providing much-needed support to renters. - A Better Deal for Renters
A new framework to protect renters’ rights will be introduced, including:
- Strengthening protections against eviction without genuine grounds.
- Limiting rent increases to once a year.
Reactions to the Budget
Industry experts have shared mixed reactions to the Federal Budget. PEXA’s Chief Economist, Julie Toth, noted that while demand for housing remains strong, supply continues to be a major issue. Master Builders CEO, Denita Wawn, described the budget as sensible but expressed disappointment that more wasn’t done to address construction costs and regulatory barriers that are hindering housing delivery.
Despite these challenges, the federal government remains committed to meeting the 1.2 million home target by 2029. However, the industry is calling for more bold reforms to address the housing crisis.
The Federal Budget 2025-26 has introduced a range of initiatives to support homebuyers, small businesses, and the construction industry in Australia. These changes aim to make homeownership more accessible, help renters, and encourage investment in regional banking and housing supply. An experienced mortgage broker should be up to date with these latest changes to help you stay informed on these developments to take full advantage of the opportunities presented for your own unique situation.
Looking for advice or help with navigating the latest changes in the housing market? We are an experienced Perth mortgage broker specialising in home loans for self employed, first home buyers and homebuyers with complex issues like superannuation or reverse mortgages. We love a challenge and will do our utmost to help you regardless of your situation. Our aim is to make it easy for you. So please log on to our calendar now to select an appointment time that is convenient for you. Alternatively, you can send an enquiry through our contact us page.
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Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute financial or professional advice. While we strive to provide accurate and up-to-date information, mortgage laws and regulations can change, and individual circumstances may vary. We recommend consulting with a qualified financial advisor or mortgage broker to assess your specific situation and needs. Base Home Loans is not responsible for any actions taken based on the content of this blog. Always conduct your own research and consider seeking professional advice before making financial decisions.
