Stage 3 Tax cuts - how will it effect your borrowing capacity?

Marty McDonald

You would have heard through the media or if you’re a politics nut that the government is introducing stage 3 tax cuts from 1 July this year.

How will this affect your borrowing capacity? Proportionally the middle-income bracket will benefit the most overall, but the higher your income the more your capacity will improve on a $ basis. We anticipate in general a 10% increase for middle-income earners.

Home loan interest rates are also tipped to drop in the second half of this year, which is great for existing borrowers and will make it easier for those looking to purchase something new.

General borrowing capacities are at a low ebb now, because of the higher level of assessment rates being mandated by APRA. This combined with the higher living expenses has made borrowing proportionally harder than in the past. Because of this there is pressure from the banks on APRA to reduce the 3% pa mandated buffer. I can see this being adjusted if the property market cools.

All in all, borrowing should become a little easier in the 2nd half of the year.

About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on  and LinkedIn.
< back