Australia’s 2025–26 federal budget arrives at a time when many people – from first-home buyers to seasoned property investors – are feeling the pinch of rising living costs and fluctuating interest rates.
Modest tax cuts, extended home-buying programs, and fresh cost-of-living measures aim to give Australians clearer guidance on their financial decisions. Below is an overview of the key budget measures, along with insights on how they might affect you.
Summary of key budget measures
1. Tax cuts for individuals
From 1 July 2026, the government is lowering the tax rate for lower-income earners, leaving workers with a bit more take-home pay. This, in turn, may bolster household budgets and offer extra breathing space for mortgage repayments or new loan applications.
2. Extended home-buying programs
Programs such as the First Home Guarantee and Help to Buy are being expanded or continued, making it easier for eligible Australians to purchase property with a lower deposit. These programs aim to help both first-home buyers and certain other cohorts, like single parents, enter the market sooner.
3. Cost-of-living relief
In addition to tax changes, the government is extending energy bill rebates, further subsidising critical medicines, and providing more support for those on low and middle incomes. The goal is to help households manage everyday expenses so they can keep mortgage stress at bay.
4. Support for small businesses
If you’re self-employed or operating a small business, you’ll benefit from targeted incentives, including tax compliance and digital transformation grants. Accessing these supports could help streamline your finances, which is particularly handy if you’re planning to refinance or take out a business loan secured against your property.
5. Infrastructure and housing supply
The budget also allocates funds for large-scale infrastructure projects, as well as plans to accelerate modern building methods in housing. Although it can take time for these initiatives to flow through, more supply should eventually help moderate house prices in some regions.
How it could affect you
1. First-home buyers
a. Accessing extended or new government schemes can significantly reduce the deposit hurdle. With extra cost-of-living support, it may be easier to save.
b. Things to note: Interest rates, property prices, and eligibility criteria still shape how far your money can stretch. Speaking with a broker about current incentives is a great place to start.
2. Refinancers
a. Slightly lower personal tax rates could give you more funds to direct towards mortgage repayments. If your interest rate is no longer competitive, this might be a prime time to revisit your loan.
b. Things to note: Factor in any refinancing or break fees. And keep an eye on potential rate changes that could influence your decision.
3. Upgraders
a. If you’re looking for a larger home, modest tax relief and stable employment conditions may support a bigger loan. Energy bill rebates and other cost-of-living supports can help offset some of the increased running costs in a bigger property.
b. Things to note: Confirm that you can manage higher repayments if rates rise further. Also weigh up the potential advantages of selling your current property before buying again, especially in fast-moving markets.
4. Property investors
a. Stronger household budgets could mean tenants are less likely to fall behind on rent. Government funding in housing supply may stimulate new rental opportunities over time.
b. Things to note: Rental yields, property values, and interest rate trends remain uncertain. If you’re considering adding to your portfolio, a broker can help you assess how recent budget changes might impact your cash flow.
Budget pros, cons, and practical tips
· Pros
o Extra breathing room: Even a small tax cut can free up funds for mortgage repayments or savings.
o Better entry pathways: Extended home-buying programs help lower upfront hurdles like deposits and lenders mortgage insurance.
o Housing market stability: Long-term investment in infrastructure and supply may eventually relieve price pressures.
· Cons
o Ongoing uncertainty: Interest rates and property prices can change quickly, so keep in mind that government incentives don’t fully mitigate these risks.
o Eligibility criteria: Schemes often have specific requirements—like income thresholds or property price caps—that limit who can participate.
· Practical tips
o Chat to a mortgage broker: They can walk you through your options, especially regarding eligibility for home-buying schemes.
o Review your loan regularly: You may find that switching lenders or negotiating a better deal could save you thousands in the long run.
o Budget for fluctuations: Factor in potential interest rate rises, property expenses (like council rates, maintenance, and insurance), and living costs when deciding on your borrowing capacity.
Whether you’re preparing to purchase your very first home, exploring refinancing, sizing up for more space, or investing in rental properties, it’s essential to stay informed about how the 2025–26 federal budget may influence your finances.
If you’re unsure where to start, remember that professional guidance from a mortgage broker can help you with your loan.