💰 Has Your Borrowing Power Increased in 2025? Here’s Why It Might Have
If you haven’t checked your borrowing power lately, now’s the time. A lot has changed in 2025—from interest rates to tax cuts—and your borrowing capacity could be higher than you think.
Whether you’re a first-home buyer or planning your next investment, understanding your borrowing power is key to making confident property moves.
• What Is Borrowing Power?
• 4 Reasons Your Borrowing Power Might Be Up
• How to Increase Your Borrowing Power
• Know Your Number
• Disclaimer
🚀 What Is Borrowing Power—and Why Does It Matter?
Your borrowing power (or borrowing capacity) is the amount a lender is willing to let you borrow for a home loan. It’s shaped by:
• Your income
• Your household expenses
• Any existing debts
Each lender has their own formula, but the basics remain the same. And here’s the kicker: your borrowing power isn’t fixed. It can shift with changes in your financial situation—or broader economic trends.
Want to learn more about how lenders assess your finances? Check out our guide to home loan eligibility.
Look at our calculators on this link
📈 4 Reasons Your Borrowing Power Might Be Up in 2025
1. 💸 Interest Rates Have Dropped
Two official rate cuts this year have nudged home loan interest rates lower. In 2024, the average variable rate was around 6.3%. Today, it’s closer to 5.8%.
Lower rates = lower repayments = higher borrowing power.
According to Canstar, the February and May rate cuts could mean:
Explore our latest home loan options to see how lower rates could work for you.
2. 🧾 Tax Cuts Have Boosted Take-Home Pay
Stage 3 tax cuts kicked in this year, putting more money back in your pocket. Less tax means more after-tax income—and that can translate to a bigger loan.
Compare the Market estimates that a couple with no kids could see a $47,000 jump in borrowing capacity.
3. 💼 Wages Are Rising
From July 1, around 2.9 million Aussies received a 3.5% pay bump thanks to increases in the National Minimum Wage and award wages.
Even if you’re not on an award, you might’ve scored a raise—or landed a higher-paying role. More income = more borrowing power.
Want to know how your pay rise affects your loan options? Let’s chat.
4. 🎓 HECS-HELP Debts Are Being Treated Differently
In a welcome shift, lenders in 2025 can now exclude HECS-HELP repayments from their calculations—if your student debt is nearly paid off.
This change could significantly boost your borrowing power, especially if you’ve been chipping away at your HECS balance.
Read our blog on HECS debts
🔧 How to Increase Your Borrowing Power Even More
Want to give your borrowing capacity an extra lift? Try these smart moves:
✅ Trim Your Regular Expenses
Lenders assess your spending habits. Cutting back on subscriptions, switching to cheaper utilities, or reviewing your budget can help.
Check out our tips on budgeting for your first home.
💳 Lower Your Credit Card Limit
Lenders look at your credit card limit—not your balance. Every $10,000 in limit can reduce borrowing power by around $50,000. Consider lowering your limit if you’re not using it.
🚗 Pay Down Other Debts
Reducing personal loans, car loans, or other repayments can free up capacity for a home loan. It’s not always easy—but it’s worth it.
Need help with debt consolidation or refinancing? Visit our dedicated refinancing page here.
📊 Know Your Number Before You Borrow
Just because you can borrow more doesn’t mean you should. But knowing your borrowing power helps you plan smarter and act with confidence.
At CBM Mortgages, we’ll help you:
• Understand your current borrowing capacity
• Explore ways to improve it
• Find a loan that fits your goals
👉 Get in touch today to find out where you stand—and how far you could go.
⚠️ Disclaimer
This article is general in nature and doesn’t constitute financial or tax advice. Always consider your personal circumstances and seek professional guidance before making decisions.
Written by Craig McDonald 07/08/2025
