With 2025 fast approaching, Australians could find some much-needed financial relief thanks to potential rate cuts, increased government support payments, and new opportunities for first-home buyers. According to Canstar, these changes could provide a much-needed cushion for many households struggling with high living costs and financial uncertainty.
Possible Rate Cuts Could Provide Mortgage Holders with Relief
A major source of financial stress for many Australians is their mortgage repayments. Canstar has forecast that several major banks, including the Commonwealth Bank of Australia (CBA), Westpac, NAB, and ANZ, could implement cash rate cuts between February and May 2025.
The CBA is expected to lead the way with four rate cuts, which could result in a $358 reduction in monthly repayments for a $600,000 loan by the end of 2025. Westpac is also expected to make four cuts, leading to a $357 decrease in repayments over the same period.
While these predictions are promising, Sally Tindall, Canstar’s Data Insights Director, warned Australians not to pin their hopes on these potential changes. She cautioned that there is no guarantee the Reserve Bank of Australia (RBA) will lower rates as expected.
For mortgage holders, Ms. Tindall recommended taking a proactive approach by refinancing or negotiating current interest rates to reduce debt load before any potential RBA cuts. By doing so, borrowers could improve their financial situation and maximize savings if the predicted cuts do occur.
Increased Support Payments to Ease Financial Burdens
In other positive news, the Australian government is set to increase key support payments, including Youth Allowance and Austudy, by $30.60 per fortnight. While the increase may not completely resolve financial strain for many households, it could still offer some relief for those who rely on these payments to cover essential living costs.
For those living on government assistance, Ms. Tindall emphasized that this indexation would be a welcome boost. Although it won’t be enough to close the financial gap for many, it could help individuals and families manage their day-to-day expenses with a little extra support.
Help to Buy Program to Assist First-Home Buyers
For lower-income Australians hoping to buy their first home, the Help to Buy program could provide a vital opportunity. Passed in November, the scheme allows up to 40,000 first-home buyers over four years to secure a property with a lower upfront deposit and reduced mortgage repayments.
Under this program, the Commonwealth will contribute 40% of the purchase price for new homes and 30% for existing homes, making homeownership more accessible for those with an annual income of less than $90,000 for individuals or $120,000 for couples. The program will also offer price caps for homes, which vary by state and location but range from $450,000 to $950,000.
While Ms. Tindall acknowledged that the program doesn’t directly address the underlying issue of rising property prices, it could still help low- and middle-income Australians ease into homeownership by reducing the amount of debt they need to take on.
Financial Planning: A Smart Move for 2025
With these anticipated changes, Ms. Tindall also recommended that Australians take the opportunity to prepare financially for 2025. Setting a clear budget and establishing financial goals will help individuals navigate the year ahead with more clarity and control over their financial future.
By creating a strategy for their finances, Australians will have a better understanding of how to achieve their long-term goals, whether it’s paying off debt, saving for a home, or managing daily expenses.
