Home Buying in 2025: Borrow Smarter in a High-Rate Market
According to the latest ABS data, Australia’s wages grew by 3.4% over the year to September 2025. This is the highest rate outside pandemic times, and importantly, it means Australian pay packets have now outpaced inflation for eight quarters in a row. In practical terms, earning 3.4% more can slightly boost your borrowing capacity. Lenders base loan amounts on your income-to-debt ratio, so higher wages, even if only a bit above inflation, can translate to a somewhat larger home loan.
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Interest Rates: No Quick Relief
With wages up, you might wonder when rates could fall. The Reserve Bank has held the cash rate at 3.60%, noting recent inflation surprises mean it must “remain cautious on policy”. In fact, most analysts (and even KPMG’s economists) now expect no immediate rate cuts. KPMG observes that the current cash rate is already restrictive, so any easing will likely be gradual and delayed. In other words, don’t count on rate relief this month. This outlook affects loan strategy: if rate cuts are pushed well into 2026 or beyond, fixing at today’s high rates may not bring big short-term savings. We advise weighing fixed vs variable loans carefully. With cuts unlikely soon, a fixed rate locks in stability, while a variable rate may eventually benefit if the RBA does ease later.
Apartment Supply and Strong Demand
Housing demand remains unusually strong. The Housing Industry Association (HIA) reports that multi-unit (apartment) starts are set to rebound from 2026 onward. In fact, by 2026, they forecast roughly 76,600 new apartments will begin construction, rising toward 100,000 by 2029t. Why? Australia’s population is still surging (heading past 30 million) and migration flows are high, keeping housing demand intense. Even with more apartments coming, competition for housing is likely to stay fierce. In this climate, planning your purchase is key. For example, off-the-plan buyers have more time to save and prepare finance, but also face the risks of supply gluts. Our brokers can advise on timing your offers and finance strategies as more units hit the market.
Navigating Loan Approvals and Broker Support
One thing borrowers should never overlook is getting pre-approval early. Lenders’ processing times can really blow out when markets are busy. Surveys show a wide gap: Macquarie Bank’s average approval time is under 2 business days, while some smaller lenders (e.g. Auswide or People’s Choice) can take 11–14 days. Brokers note that quick turnaround is now a top priority for clients. By securing a pre-approval, you lock in your position and give yourself breathing room if banks slow down. Any extra income from wage rises? We recommend using it to build a buffer or pay down debt before you buy – it strengthens your application and gives you financial wiggle room. Crucially, this is where a broker (like us at ASK Financials) really adds value: we know which lenders are processing loans fastest and we steer you toward the right ones. We’ll also check that you’re on track to meet loan buffers and lender requirements, and help structure your application to meet each bank’s policies.
Key Takeaways for Home Buyers
Higher wages (+3.4% YoY) give a slightly bigger borrowing power. Use our calculators (or chat with us) to update your numbers. Rates are staying firm – forecasts now say no rate cuts in the short term. This will influence whether a fixed or variable loan suits you. Get pre-approved early. Loan approvals can take much longer in busy times, so secure your finance before seriously house-hunting. New apartments are coming, but demand is high. If you’re eyeing off-the-plan units, plan your finance strategy with us well in advance. Leverage a mortgage broker: We can match you with lenders known for fast service and good client support, smoothing out the process.
At ASK Financials, we make the loan process simple and guide you every step of the way. Speak with us today to chat through your options. We offer free consultations. Call 0433 944 055 or visit our website to book a time.
