u/Linton-Finance

I see a lot of comments along the lines of “once you’ve got kids, borrowing power falls off a cliff”. It doesn’t. It steps down.

To put real numbers around it, here’s a simple benchmark using a major bank.

Two adults earning $100k each. No other debts. Normal living expenses. Employed FT and healthy deposit.

Here’s how borrowing capacity changes as dependants increase:

Kids (dependent)	Borrowing capacity	Total reduction vs no kids
0	$1.046m	–
1	$997k	−$49k
2	$957k	−$89k
3	$929k	−$117k
4 (strong swimmers)	$902k	−$144k

That works out to roughly $35–50k of borrowing power per child. It’s not a sudden drop and it’s not punitive. Each dependant just adds an assumed cost into the living expenses benchmark.

Keep in mind that this number could fall further if you have private school fees or if living costs are higher than the bank benchmarks.

There are options where banks can include private school fees in benchmarks, but those lenders are very limited.

Of the dozens of first home buyers I speak with every month, only a small handful have used the FHSS properly. Most people know about the 5% deposit scheme or stamp duty discounts. Far fewer realise super can also be used as part of a deposit strategy.

To be clear, it does not let you withdraw your existing super.

It lets you make extra voluntary contributions into super, then later apply to release eligible amounts plus associated earnings to help buy your first home. The current caps are $15,000 per financial year and $50,000 total. If you’re buying as a couple, both of you can use it.

Concessional contributions are generally taxed at 15% going into super, which is usually lower than your marginal tax rate.

With the financial year coming to a close, this is where it gets interesting. If a couple each contributes $15,000 before 30 June, then each contributes another $15,000 after 1 July, that’s $60,000 of gross contributions working through the FHSS across two financial years.

This is just my general perspective and you should check both the FHSS and ATO website for more details.

One detail in the budget that I don’t think is getting enough attention is what it means for existing owner occupiers who upgrade later.

The budget language says properties held before 7:30pm AEST on 12 May 2026 are exempt from the negative gearing changes. It also says every existing property owner can continue to negatively gear properties held before announcement.

So if you owned and lived in your home before budget night, then later upgrade and keep the old property as an investment, it appears that property may still sit under the grandfathered negative gearing rules.

That is a pretty big deal.

It means upgrading could become more attractive for existing owners. Instead of selling the old home, some may look to retain it, rent it out and continue using negative gearing, while future buyers of established investment properties face the new rules.

Obviously we still need legislation and tax advice before anyone makes decisions, but based on the current budget wording this looks like one of the more interesting unintended consequences

One detail in the budget that I don’t think is getting enough attention is what it means for existing owner occupiers who upgrade later.

The budget language says properties held before 7:30pm AEST on 12 May 2026 are exempt from the negative gearing changes. It also says every existing property owner can continue to negatively gear properties held before announcement.

So if you owned and lived in your home before budget night, then later upgrade and keep the old property as an investment, it appears that property may still sit under the grandfathered negative gearing rules.

That is a pretty big deal.

It means upgrading could become more attractive for existing owners. Instead of selling the old home, some may look to retain it, rent it out and continue using negative gearing, while future buyers of established investment properties face the new rules.

Obviously we still need legislation and tax advice before anyone makes decisions, but based on the current budget wording this looks like one of the more interesting unintended consequences.

The negative gearing changes will get most of the headlines, but the CGT changes are probably the sleeper issue. From 1 July 2027, it looks like the 50% CGT discount is being replaced with indexation for CGT assets more broadly, not just investment properties.

That matters because a lot of renters trying to buy are not sitting on piles of cash in a savings account. Many are using ETFs and shares to try and build their deposit faster while house prices are moving.

So while the policy is framed around helping younger Australians into housing, there’s an awkward trade off here. The same person renting, saving aggressively and investing to build a deposit will pay much more tax under the new rules.

I get the argument for reducing distortions in property. But applying the CGT change more broadly feels like a pretty big punch in the gut for the exact cohort trying to close the deposit gap without relying on the government guarantee.

I appreciate this is a very niche post, but in the spirit of sharing interesting bank policy, I’ll post it anyway. I’ve found many brokers don’t even know this exists.

Home loan applications can be a major headache for partners at law or accounting firms.

Partnership income, trusts, distributions and retained earnings often mean lenders ask for a heap of extra explanation just to prove what you actually earn.

But there’s a policy with one of Australia’s major banks that can make this much easier.

For eligible partners at top-tier law and accounting firms, the bank can accept an email from HR or payroll confirming income as proof of earnings.

This can apply to partners at firms like Allens, Clayton Utz, Corrs, G+T, HSF, KWM, MinterEllison, Norton Rose, Deloitte, EY, KPMG, PwC, PKF, Grant Thornton, BDO, RSM and others on the approved list.

It’s a tiny policy detail, but is another example of why lender policy can matter for the overall customer experience.

With the budget coming up on Tuesday night, there’s plenty of debate online about whether the government will touch negative gearing.

I thought I would show you what a removal of negative gearing would actually do to the purchasing power of investors.

Say a first-time investor has had solid growth in their family home, owes $500k on the PPOR, has one child and a combined income of $250k. They’re now looking at buying an investment property with expected rent of $800 per week.

Under current policy, their additional purchase limit is approx. $1.35m with major banks and around $1.75m with non-bank lenders.

Remove the tax deduction when calculating servicing, and that can fall $935k with majors and around $1.2m with non-banks.

If around 40% of new home loans are investors and a large portion of those investors suddenly had materially less borrowing power, it’s hard to believe there would be no impact at all.

Negative gearing isn’t just a tax discussion. It directly changes how much some people can borrow and could mean more competition in the lower end of the market where first home buyers are already finding it competitive.

The rent vs buy debate can sometimes be reduced to a basic weekly comparison. Rent is $800, the mortgage would be $1,000, so renting looks cheaper.

But that misses the biggest variable: Time.

If a $1m property grows at 5% p.a, it’s worth about $1.63m in 10 years. If rent starts at $800 per week and rises at the same 5%, it becomes about $1,300 per week.

Meanwhile, the buyer’s loan balance is slowly reducing in the background while the asset is compounding.

Buying is not always better. Stamp duty, rates, maintenance, insurance, flexibility and opportunity cost all matter.

But comparing rent vs mortgage repayments in year one is a lazy comparison. The real question is what position you’re likely to be in 10-30 years from now.

The RBA has lifted the cash rate by another 0.25%, taking it to 4.35%.

What’s interesting is how differently lenders are passing it on.

AMP is moving first, increasing variable rates from 11 May. The majors are all moving on 15 May. Macquarie is waiting until 22 May. Teachers Mutual Bank is holding off until 1 June.

That’s roughly a three-week gap between the fastest and slowest movers.

Just a heads up for anyone buying or refinancing right now…

With the cash rate rising, most lenders have already confirmed they’re passing it on in full as soon as the 15th May.

A 0.25% increase is roughly a $20-25k drop in borrowing power for a typical household.

If you already have an assessed pre-approval in place, it’s assessed on the rates at the time you applied.

So if your loan is lodged before the lender updates their rates, you should be fine but always best to check with your broker as not all banks operate this way.

At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.35 per cent.

Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of this increase reflected greater capacity pressures.

In addition, the conflict in the Middle East has resulted in sharply higher fuel and related commodity prices, which are already adding to inflation. There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen.

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Feels like every few years we hit a this time is different moment.

Right now it’s inflation, global tensions, rate expectations moving around and a lot of people are wondering if they should just wait for clarity. Most buyers are feeling that hesitation.

But zoom out and there’s always something. GFC, euro debt crisis, COVID, Orange man in the US.

In the moment it always feels like it could get worse, so people hold off waiting for things to settle. The catch is clarity usually shows up after the opportunity has already passed. That doesn’t mean rushing in, and for some people waiting is the right call. But for others in a stable position with a long-term view, doing nothing can be the bigger risk.

The better question isn’t should you buy, it’s how you set things up so you’re not exposed if conditions change. Comfortable repayments, a buffer in offset, not overextending, and keeping flexibility. Lending is open today, but it can tighten quickly.

That part isn’t in your control but being prepared is.

Would love to hear the communities perspective on where you think rates are heading next Tuesday.

Based on the inflation data, the markets are currently pricing in a 76% chance of a 0.25% increase.

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Refinancing usually comes down to a few simple drivers.

Lower rate or repayment is the obvious one. Rates move, discounts change, or someone took a loan a few years ago at a higher LVR and never reviewed it.

Accessing equity is next. Renovations, buying another property, or investing in shares. If you’re under 80% LVR, a lot of lenders will let you release funds fairly easily.

Debt consolidation comes up more than people think. Credit cards, car loans, personal loans, even ATO debt. It can reduce monthly pressure, but you’re turning short-term debt into long-term debt, so it needs to be done carefully.

Then there’s strategy. Switching to interest only, splitting loans, or restructuring for future purchases.

Between discharge, setup and ongoing fees, you’re usually around $1k in, so there needs to be a clear benefit.

Seeing a lot of chatter leading into the federal budget around reducing the CGT discount. Spend 5 minutes in some of the other subreddits and the narrative is pretty clear… investors are the reason prices have run, tax them more and the market corrects.

I get why people think that, especially if you’re trying to break in and prices feel out of reach. But I’ve been asking clients this directly over the last couple of weeks… if CGT changes came in would it actually stop you buying or make you sell? So far, not one has said yes. Most are buying for the long term. Tax helps, but it’s not the reason they buy and it won’t be the reason they sell.

If anything, changes like this just mean more tax collected, not necessarily more housing. The pressure I’m seeing right now isn’t investors anyway. It’s first home buyers all competing under the same caps, at the same price points, with higher rates and tighter borrowing.

If the goal is affordability, the lever is still supply. Make it easier to move by reducing stamp duty for people upgrading or downsizing, and make it simpler to build with faster approvals and more meaningful incentives.

The big banks are tightly regulated by APRA, so they have to follow stricter rules around servicing, buffers, and risk. Non-banks sit outside of that, which is where the flexibility comes in.

They tend to win deals where the loan just doesn’t make sense at a major. That could be lower credit scores, self-employed income that hasn’t hit financials yet or high debt-to-income ratios.

Regulated banks have to assess your loan at around 3% above the actual rate. Non-banks can be closer to 1% and will often take your existing repayments at their actual level, even if they’re interest-only. Add in lower living expense benchmarks and no real DTI caps, and the borrowing power can move hundreds of thousands of dollars.

Keep in mind rates are higher, customer service is usually worse, and depending on the deal there can be risk fees.