Welcome to our December Newsletter

With the year drawing to a close, 2025 stands out as a year of significant movement in the property market.

2025 delivered a surge in national dwelling values, with November marking the third month in a row that had growth of 1% or more. Even as the pace began to ease, momentum remained strong across much of the country.

Three cash rate cuts, renewed confidence, investor activity and the federal government’s expanded Home Guarantee Scheme (now the 5% Deposit Scheme) all played a major role in driving prices upward throughout the year.

If you’re thinking about buying a property this summer, now could be a good time to explore your finance options. Get in touch and we’ll help you get pre-approval sorted and guide you through the entire purchasing process.

Interest Rate News

At its last meeting for 2025, the Reserve Bank of Australia (RBA) left the cash rate on hold at 3.60%, holding firm despite shifting economic pressures.

The Consumer Price Index (CPI) rose 3.8% in the year to October, up from 3.6% in September. Underlying inflation, measured by the trimmed mean, also lifted slightly from 3.2% to 3.3% over the same period.

With inflation pushing above the RBA’s preferred 2–3% target band, the prospect of a cash rate cut appears increasingly unlikely. In fact, three of the Big Four banks now expect rates to hold for longer than previously forecast, while some economists are even warning of potential cash rate hikes in early 2026.

The next RBA cash rate decision will be announced on 3 February, giving borrowers a window to reassess their home loan strategy. If it’s been a while since your loan was reviewed, now may be a good time to consider a home loan review.

We’ll analyse the market for you and check whether your current loan is competitive, cost-effective, and aligned with your goals for the year ahead.

Home Value Movements

National housing values increased 1% in November, slowing down from October’s 1.1% gain.

Perth led the way, with prices increasing 2.4%. Sydney and Melbourne saw values increase 0.5% and 0.3% respectively, but every other capital city recorded a rise of at least 1% throughout November.

Cotality research director Tim Lawless said that growth in home values across the mid-sized capitals was once again diverging from the larger cities – a similar trend to the one seen in late 2023 and 2024.

“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it’s likely housing sentiment will suffer,” said Mr Lawless.

“With housing affordability already stretched and worsening, it stands to reason that fewer borrowers will be able to access credit as serviceability barriers become more prominent.

“We can already see the flow-through effect from such stretched affordability and serviceability measures, with growth in housing values skewed towards lower price points of the market.

“Over the past three months, most of the state capitals have seen values across the lower quartile of the market rising the fastest. Melbourne, where housing affordability isn’t quite as stretched, is the one exception, with the city’s broad middle of the market is seeing the fastest lift in values.”

Ready to buy?

With multiple interest rate reductions already behind us in 2025 and rates currently holding steady, many people are reassessing their plans to purchase a home. Depending on your personal circumstances, this may be a time to review whether buying your first property, upgrading, or expanding your investment portfolio is the right move for you.

From February 2026, new lending rules will also come into effect. The Australian Prudential Regulation Authority (APRA) will introduce a 20% limit on the proportion of new home loans issued to borrowers with a debt-to-income (DTI) ratio of six or more, with different limits applying to owner-occupiers and investors.

These changes are aimed at managing higher-risk lending, which APRA has observed rising alongside recent interest rate decreases and increases in property prices. While the new rules do not automatically prevent a borrower with a DTI of six or more from getting a loan, they may influence how individual lenders allocate credit across different borrower types.

If you’re considering a purchase in the coming months, it may be helpful to understand how these developments could affect your borrowing capacity, alongside your income, expenses, and financial position. Exploring your options early can provide clarity and help you plan ahead with confidence.

If you’d like guidance on what may be suitable for your situation or want to discuss pre-approval, please Get in touch.

Additional sources:

Cotality Data Daily Home Value Index: Monthly Values

https://www.realestate.com.au/auction-results/

HOW YOUNG AUSTRALIANS ARE NAVIGATING HOUSING AFFORDABILITY CHALLENGES

For many young Australians, home ownership can feel more like a distant dream than something within reach. Rising living costs, strong property price growth and slow wage increases have put real pressure on those hoping to buy their first home.

Research by Deloitte Access Economics earlier this year, highlighted just how challenging the landscape has become. Average home prices rose 67% from $548,000 to $915,000 in the decade to 2023, while average weekly incomes for Australians aged 21 to 34 only grew 20%.

The research found that major milestones like leaving home and starting a family are now being delayed. In 1981, around a third of 20 to 24-year-olds lived with their parents, but by 2021, that number had doubled to 63.8%. Nowadays, 40% of young Australians aged 25 to 34 rely on family assistance to get into the housing market.

With property prices soaring across the nation, there’s no doubt affordability is a key factor hindering entry into the market. But if you are an aspiring first-home buyer, it’s important to remember that with the right strategy and guidance, home ownership can be achievable.

Here are some of the ways you might be able to get into your own home sooner.

Help to Buy

Help to Buy is a new shared equity scheme designed to make home ownership more accessible. The Australian Government can contribute up to 30% (for existing homes) or 40% (for newly built homes) to your mortgage. With this scheme, you will only need a 2% deposit.

Applications opened on 5 December 2025, with 10,000 spots available each year. There are income limits of up to $100,000 for individual applicants or $160,000 for single parents and joint applicants.

5% Deposit Scheme

The 5% Deposit Scheme is open to all first-home buyers and allows you to purchase your first home with a 5% deposit, without having to pay Lenders’ Mortgage Insurance (LMI).

There are property price caps, but there are no limits on income or scheme places. The 5% Deposit Scheme (formerly known as the Home Guarantee Scheme) has already helped over 248,000 Australians get a leg up on the property ladder since 2020.

First Home Super Saver Scheme

This scheme allows you to save a deposit for your first home using your super.

You make extra voluntary contributions to your super fund, so that you can grow your saving faster. The benefit is you can make the most of lower tax rates.

When you’re ready to purchase, you can apply to withdraw your savings plus associated earnings and use them towards your first home deposit.

Support from family

There are a few different ways your parents or a loved one may be able to help you enter the property market.

Your parents might provide a cash gift towards your deposit (lenders will likely require a statutory declaration), or loan you the money under your own agreement.

They could also act as a guarantor. This is where they use their equity as security for your loan, reducing or eliminating the need for a deposit and helping you to avoid LMI.

Another option is to unlock their equity by refinancing their mortgage, then gifting or lending you the money. There’s also the option of joint ownership, meaning you purchase the property together.

It’s important to assess the risks involved with each scenario and seek professional advice, and to make sure everything is in writing to avoid any misunderstandings.

Ready to get started?

Buying your first home can feel overwhelming, but you do not have to navigate it alone. If you would like to understand your borrowing options and start building a plan with confidence, we are here to help.

Get in touch and let’s chat through your finance questions so you feel supported and ready to take your next step toward home ownership.

2025 IN REVIEW
AND WHAT TO EXEPECT IN 2026

Well, that’s almost a wrap on 2025 and what a year it’s been for the property market.

Let’s take a look at some of the highlights from 2025 and see what aspiring property purchasers can expect from 2026.

Looking back on 2025

Interest rates came down

The Reserve Bank of Australia (RBA) started the year with a bang, with a cash rate cut in February of 0.25% to 4.10%.

Rates held steady in April, but borrowers celebrated again in May, when the RBA cut the cash rate a further 0.25% to 3.85%.

The third and final cash rate cut for the year came in August, when the RBA reduced it by 0.25% to 3.60%. Since then, the cash rate has remained on hold.

Inflation

Inflation has taken Australians on a bit of a rollercoaster ride this year. It kicked off 2025 at 2.4% in the March quarter, easing to 2.1% by June – a welcome sign that things were stabilising.

But the calm didn’t last for long. By September, inflation had climbed back up to 3.2%, with the Consumer Price Index rising 1.3% for the quarter, which was the sharpest quarterly increase since March 2023.

Then came October, when inflation jumped again to 3.8%, signalling renewed pressure across the economy.

Considering the RBA’s target band of 2–3%, this upward trend is far from ideal and continues to shape both economic policy and household budgets.

Property prices

Property prices across Australia soared throughout 2025, driven by rate cuts, low supply and government incentives.

By October, Australia’s home value growth hit the fastest pace in more than two years throughout the month, surging 1.1%, according to Cotality. That marked the strongest monthly gain since June 2023 and pushed the annual growth rate to 6.1%.

Prices continued their upward trend in November, rising 1% nationally and pushing year-to-date growth up to 7.7%.

Overall, national dwelling values are set to close 2025 at least 8% higher. Darwin, Brisbane and Perth were Australia’s top-performing capitals, outpacing Sydney and Melbourne.

New housing initiatives

Government incentives designed to help more Australians get into the market moved the goal posts in 2025.

From October, the Australian Government’s 5% Home Guarantee Deposit Scheme was expanded to include all first home buyers, replacing the former Home Guarantee Scheme. Income caps were removed, property price caps increased, and the scheme became unlimited, meaning any first-home buyer with a 5% deposit could apply.

The Help to Buy Scheme launched on 5 December 2025, with 10,000 spots available each year. Eligible home buyers can purchase with as little as 2% deposit. The Australian Government will contribute up to 30% for existing homes or 40% for newly built homes towards the purchase price. Although, property price and income caps apply in this scheme.

Rents increased

Rents continued to climb in 2025. The median weekly rental value across Australia’s combined capital cities is now $702 per week putting even more pressure on tenants already feeling the squeeze.

Outside the cities, the picture is a little kinder. Regional rents remain noticeably lower, still sitting below $600 a week, offering some welcome relief for those willing to look beyond metropolitan areas.

What's ahead in 2026

Interest rates may remain stagnant

With recent inflation data shaking things up, economists have now revised their forecasts for where interest rates are headed in 2026.

Experts predict that the cash rate will remain on hold at 3.60% for an extended period.

Although, some economists are forecasting further cuts, with predictions that the cash rate will fall to 3.35% by June next year and to 3.1% by September 2026.

APRA’s high-DTI cap comes in

From 1 February 2026, the Australian Prudential Regulatory Authority will introduce a new 20% cap on mortgages with a debt-to-income (DTI) ratio of six or more, with separate limits applying to owner-occupiers and investors.

This means it could become more difficult for higher-risk borrowers to secure finance when lenders are nearing their cap. Although, most borrowers currently remain well below this threshold.

Market conditions may be more restrained

According to Cotality, market conditions may be more restrained in 2026, as borrowing capacity, affordability and credit assessments impact demand. National property listings remain 18% below the five-year average.

“Supply remains tight, but the demand environment is shifting,” Cotality Australia head of research Eliza Owen said.

“Inflation forecasts have been revised higher, interest rate expectations have adjusted with them, and households are facing stricter borrowing assessments.

“Those factors can temper buyer activity even when stock levels are low.

“Lower value markets may still outperform because they carry less sensitivity to credit constraints, but overall growth is likely to be more measured compared with 2025.”

Together, these factors paint a picture of a property market entering a more cautious phase. While opportunities will still emerge, particularly in lower-value markets, buyers and investors may need to navigate 2026 with a more strategic, measured approach.

Like to chat through your finance options?

After a year of economic shifts and rate changes, 2026 is shaping up to bring fresh opportunities. Whether you’re thinking about refinancing, buying a home or making your next investment move, being informed and having your finances in good shape will make all the difference.

If you’d like to explore your 2026 plans and the finance options available to you, Get in touch today.

BUY NOW, PAY LATER:
COULD IT AFFECT YOUR HOME LOAN APPROVAL?

Buy now, pay later. Sounds convenient and harmless, right?

It’s no surprise that Buy Now, Pay Later (BNPL) services like Afterpay have surged in popularity as it lets you split purchases into smaller, interest-free instalments (as long as you pay on time). In fact, the value of BNPL transactions in Australia is expected to jump from about AU $17 billion in 2023 to an estimated AU $30.71 billion by 2029.

But there’s a catch. Earlier this year, significant changes rolled out for how BNPL services are regulated. And if you’re gearing up to buy property, these updates aren’t just background noise – they could directly impact your borrowing power and your path to approval.

What were the changes?

Previously, BNPL services were able to sidestep Australia’s credit laws. Users could sign up easily, with no real checks on your financial situation and ability to pay the instalments.

As a result, there were growing concerns around the number of people overspending and getting into financial trouble. ASIC research found 1 in 5 BNPL users said they had cut back on or went without basic essentials like food to make repayments on time, while 1 in 6 took out an additional loan to cover their repayments.

These concerns have led to the government to step in to regulate BNPL services. From June 2025, BNPL providers in Australia became officially regulated under national credit laws.

BNPL providers must now:

Hold an Australian Credit Licence

Conduct affordability checks before approval

Follow responsible lending guidelines.

Notably, missed payments can be reported to credit bureaus and will show up on your credit report, the same way a credit card default might.

How does BNPL affect home loan eligibility?

Banks look at your credit score and credit report as part of your home loan application. With mandatory credit reporting in place, missed BNPL payments can appear on your credit file.

Missed payments can signal financial risk to lenders and impact your ability to get a home loan. Even if you don’t miss BNPL payments, frequent BNPL use could raise red flags, as it may translate to you not being able to manage your finances or being under financial stress.

The bottom line is that occasional use of BNPL services is not going to annihilate your chances of home loan approval, especially if it’s used responsibly and paid on time. However, if you tend to rely on BNPL and regularly miss payments, it may end up costing you your home loan.

What should I do next?

If you’re planning a property purchase, it’s a good idea to get on the front foot and take control of your BNPL spending habits as soon as possible.

Pay off any outstanding balances, reduce your reliance on BNPL, and close any unused accounts. Where possible, reduce your BNPL credit limits, as this can improve how lenders assess your overall financial position.

Additionally, you can check your credit report to see whether your BNPL activity is listed. You can do this through:

Equifax Australia
Experian
illion

Furthermore, ensure that your BNPL activity is accurately recorded and current. If you find errors, raise them directly with a credit reporting body.

Like to chat with a professional?

Understanding how spending habits affect your credit profile is essential before applying for a home loan. If you feel your BNPL use is becoming difficult to manage, it can be helpful to speak with a qualified financial adviser or financial counsellor for personalised guidance. They can support you in getting back on track and strengthening your financial wellbeing.

When you’re ready to look at your home loan options, we’re here to guide you through the process and help you prepare a strong, confident application. Get in touch whenever you’re ready to take the next step.

It's been a wonderful, big year for the team at MyFN.

From all of us here at My Finance Network, Have a Merry Christmas and a Happy New Year!