Key points:
- Market Conditions for Buyers in 2025: The real estate market has shifted in favour of buyers, with sales volumes in 2024 lower than previous years and longer time to sell homes. This suggests vendors may lower prices, giving buyers more negotiating power. Buyers are advised to focus on saving, improving credit scores, and seeking pre-approval for home loans.
- Help to Buy Scheme: A new government program called “Help to Buy” allows lower and middle-income earners (under $90,000 for individuals, $120,000 for joint buyers) to purchase homes with government assistance. The government will take an equity stake in the property (up to 30% for established homes, 40% for new homes), reducing the buyer’s financial burden. Buyers will only need a 2% deposit and will avoid lender’s mortgage insurance.
- Impact of Interest Rates on Borrowing: High interest rates, which have risen by 4.25% since 2022, have reduced borrowing capacity by about 40%. If the Reserve Bank of Australia (RBA) lowers rates, borrowing power will increase. The banking regulator (APRA) may also reduce the “mortgage serviceability buffer,” which could help improve borrowing capacity.
- Rising Use of Mortgage Brokers: About 75% of homebuyers now use mortgage brokers, who can compare a wide range of home loan products. Brokers are especially helpful for refinancing, as many lenders offer better deals to new customers. Refinancing could save borrowers significant amounts by lowering their interest rates.
In conclusion, the opportunities for buyers and suggesting actions to take, especially for those considering government programs or refinancing options.
