Federal budget 2025: Key things for mortgage holders and buyers to watch for tonight

Australia is expected to hit a record level of debt, but what matters to voters is the fact that the nation’s housing market has never been more difficult to get into.

New housing initiatives

Early reports suggest that housing will receive more than $850 million in this year’s budget to help first time buyers get in the market and bolster home building.

The government will also invest $800 million into its Help to Buy shared equity scheme as the program is expanded, now set to cost $6.3 billion. The extra cash will increase the income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants.

The scheme will also boost the property price caps to give first home buyers more choice in the market. The scheme will open for applications later this year, which will be sure to give first home buyers a fresh chance to get into the market.

The Housing Industry Association (HIA) welcomes the commitment to new housing initiatives in the federal budget, deeper reforms that deliver lasting supply improvements are desperately needed, director Jocelyn Martin says.

“Lifting income thresholds and linking property caps to average house prices will better reflect market conditions and broader the potential uptake of this scheme across more regions.

'How interest rate cuts affect the property market': youtube.com/mortgagechoice

“But while these initiatives are encouraging, they must be backed by broader and deeper reforms if we are to meet the national target of 1.2 million new homes over five years,” MsMartin says.

The HIA wants the government to continue to work with industry on streamlining housing regulation and reducing duplication across state and federal levels – particularly for building approvals, environmental assessments and housing design compliance.

Help for first home buyers

Mortgage Choice mortgage broker Josh Almond hopes that there will be incentives announced to help first home buyers get into the market. Stamp duty concessions and lowering buyer thresholds would make a huge difference, he says.

Almond is also hoping to see the government’s home guarantee scheme continue so that more buyers can use the allocations made available. “Ensuring people don’t have to pay Lenders Mortgage Insurance is a great win.”

“Some first home buyers we speak to think they are in a position where they can buy, but in reality, they probably aren’t, because they aren’t aware how much stamp duty is going to set them back.

'Government grants and schemes': youtube.com/mortgagechoice

"In some instances, we’re unfortunately having to suggest that they are going to have to wait longer and keep saving,” Almond says.

Home Guarantee Scheme

This scheme buyers get into the market quicker by helping those will less than a 20 per cent deposit get into the market without the need to pay costly Lenders Mortgage Insurance by guaranteeing the loan.

The scheme includes three types of guarantees – the First Home Buyer Guarantee, Regional First Home Buyer Guarantee and the Family Home Guarantee. There are hopes that the thresholds to access these schemes might be softened to enable greater access. 

HECS home lending plans

There are also plans to soften home lending rules for first home buyers, which is designed to help the federal government reach is 1.2 new homes target.

The plan asks banks to exclude HECS-HELP repayments from mortgage serviceability assessments if it is anticipated that the borrowers will be able to pay off their debt. While eligibility for the plan hasn’t been revealed yet, it’s likely that price and income caps will form part of the plan.

University students will get their debt waved from consideration when it comes to home lending eligibility. Picture: Getty

National housing accord

The government’s national housing accord has been difficult to deliver given the difficulties facing the construction sector – including a labour shortage, delays and cost blowouts due to rising prices.

While 29 projects have reached contract close at the start of March to deliver 2,107 social and affordable homes, it isn’t yet known what might be laid out in the Budget when it comes to the accord deliverables moving forward. This one is a case of wait and see.

Rightsizing reforms

There have been calls for the government to introduce incentives to encourage older Australians to downsize, which would free up the national shortage of larger family homes.

While there are only hopes about these reforms making it into the budget, it is possible that anyone considering downsizing could benefit from the potential for tax benefits for downsizing as part of the push to find the 1.2 million homes needed to house Australians.

Reducing construction costs

The Master Builders Association lodged a pre-budget submission calling for the next Federal Budget to focus on unlocking greater capacity in the building and construction sector. To do this, the government would need to tackle entrenched inflation and declining productivity, which is currently holding the nation back.

The MBA points out that for every $1 spent in the building and construction industry, $3 is returned to the economy. It wants the budget to focus on lifting productivity, building more homes for Australians and ensure safety and wellbeing in the workplace, among other measures.

Support for the prefabricated construction sector

There’s a pledge in place worth $54 million towards prefabricated and modular construction, which has long been touted as a potential contributor to helping correct the nation’s housing pressures.

Prefabricated homes are usually constructed offsite before transported to location and assembled onsite, which is a quick fix for the need for affordable housing supply. The money will help the companies working in this space combat some of the roadblocks they face, including a voluntary national certification process.