Could Your Borrowing Power Be Bigger in 2025?

It’s been a year of financial shifts, and if you haven’t looked into your borrowing power lately, now’s a smart time to do so.

From tax and interest rate cuts to HECS changes, a lot has landed in favour of Aussie borrowers this year. These shifts could mean you’ve got more borrowing capacity than you thought.

Let’s break it down.

What influences borrowing power?

Also known as your borrowing capacity, this is how much a lender is willing to lend you to purchase a property.

While every lender has its assessment criteria, three big things shape your borrowing power:

• Your income
• Ongoing household expenses
• Existing debts, like car loans or credit cards

The thing is, your borrowing capacity isn’t fixed. It adjusts with your financial situation and changes in the broader economy.

This year, several changes are working in your favour. This year, several changes are working in your favour. Your borrowing capacity might be higher than you think, thanks to new policies and shifts in lending criteria.

1. Home loan rates have dipped

We’ve seen two rate cuts in 2025, easing the pressure on borrowers.

Just 12 months ago, variable rates for new home loans hovered around 6.3%. Today, they're closer to 5.8%.

Lower interest rates mean smaller monthly repayments, which can increase your borrowing power.

How much more?

According to Canstar, this year’s cuts could boost the borrowing power of a single average income earner by around $23,000. For couples, it could be as much as $40,000 to $45,000.

2. Tax cuts are now live

Stage 3 tax cuts rolled in last year, and they’re putting more back into people’s pay packets.

Lower tax means more take-home pay, which helps improve your borrowing power when lenders do the maths.

Compare the Market estimates that a couple with no children may now be able to borrow $47,000 more than before the cuts.

3. Wages have gone up

More than 2.9 million Aussies saw their pay increase from 1 July thanks to a 3.5% lift in the National Minimum Wage and award wages.

If you’ve had a pay rise or even changed jobs for a better salary, it’s worth finding out how your new income affects your borrowing power.

Every extra dollar counts when lenders look at what you can afford.

4. Student debt rules have relaxed

Traditionally, lenders included HECS-HELP debts in your loan application, which reduced your borrowing capacity.

But in 2025, the approach has softened. If your HECS-HELP balance is nearly paid off, some lenders might leave it out of their calculations.

That change alone could free up thousands in borrowing capacity.

Want to lift your borrowing power even more?

Here are a few smart moves to help you stretch your borrowing capacity further:

Rework your expenses: Lenders factor in your day-to-day spending. A few cutbacks, like cancelling unused subscriptions, comparing utility plans, or reviewing gym memberships, can make a real difference.

Lower your credit card limits: Even if you don’t carry a balance, high credit card limits impact how much you can borrow. A $10,000 limit can reduce your borrowing capacity by about $50,000. Dropping your limit is an easy win.

Tackle other debts: Whether it’s a car loan or personal finance, less debt on the books means more room for a home loan. It’s not always easy, but small extra repayments can help chip away at balances over time.

Check Your Borrowing Power With Osinski Finance

You might be able to borrow more in 2025, but that doesn’t mean you have to. The key is knowing your number.

At Osinski Finance, we help everyday Aussies understand their borrowing power and find the right home loan. Whether you're buying your first home or investing in your next property, we’ll guide you through it.

Get in touch today to see where you stand and how much further you could go.

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 your 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.