September 2025 Home Finance Update

The Reserve Bank’s September 30 cash rate call will make headlines, but there are other stories that could just as easily shape your borrowing power and property plans this spring:

• Borrowers paying mortgages on time at ultra-high levels

• Rising offset savings ease mortgage pain

• Why property prices have risen for 7 straight months

• Fewer Aussies using plastic – credit card numbers fall 1.7%

  
  

Get the details below.

Fewer Australians are falling behind on their mortgages. In fact, the share of home loans running 30-89 days late dropped from 0.66% in June 2024 to 0.55% in June 2025, according to APRA, the banking regulator.

Put simply, that means more than 99 out of 100 borrowers are up to date with their repayments – a really positive sign. Lower interest rates this year have helped ease pressure, and many households are managing their budgets better.

The data also shows borrowers are making different choices with their new loans:

• More people are putting down bigger deposits – 69.6% had a deposit of at least 20% in June 2025, up from 68.1% the year before

• Some are stretching their borrowing power – 5.5% of new loans had a debt-to-income ratio of six times or more, up from 5.0% in 2024

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This mix shows that while most borrowers are in good shape, people approach home loans in different ways – some want the safety of extra equity, while others focus on buying power.

If you’d like to talk through your own loan strategy – whether it’s planning a new purchase or refinancing an existing loan – please get in touch.

Borrowers are putting more money into offset accounts – and that’s cutting the interest they pay on their home loans.

On average, borrowers in the June quarter had $11,435 in offset for every $100,000 they owed on their home loan – up from $10,647 the year before, according to Australia's banking regulator, APRA.

What’s an offset account?

It’s a bank account linked to your home loan. Whatever money you keep in it is counted against your loan balance, which means you pay less interest. For example, if you owed $500,000 on your home loan and kept $20,000 in your offset, you’d pay interest on only $480,000 (i.e. $500k minus $20k) – not the full $500,000. On a 30-year loan at 5.68%, that could mean saving over $100 per month.*

When offset is useful

• If you keep a good amount of savings or regular cash flow in your account

• If you want the flexibility to access your money anytime, while still reducing interest

  
  

When it may not be worth it

• If your balance is usually low – the fee for an offset account might cost more than the interest you save

• If a basic home loan with a lower interest rate would leave you better off

  
  

* This example is for illustration only and does not take into account your personal circumstances. Savings will vary depending on your loan, interest rate, fees and charges. This information is general in nature and should not be taken as personal financial advice.

Australia's median property price has now increased for seven consecutive months, after rising another 0.7% in August, according to Cotality. Three main factors have been driving this price growth, Cotality said:

1. The three interest rate cuts in 2025 have increased buyers' borrowing capacity

2. Wages have been rising faster than inflation, further increasing borrowing capacity

3. Demand has been exceeding supply – the number of homes being purchased is about 4% higher than the five-year average, but the number of homes being listed for sale is about 20% below the average for this time of year

Why get a pre-approval before you start your property search

• Show you’re serious – sellers and agents generally prefer dealing with buyers who already have their finance in place

• Know your limit – knowing how much you can borrow means you won't waste time looking at homes you can’t afford

• Act fast – when you find your dream home, you can make a firm offer without waiting for the bank

  
  

Consumers are reducing their reliance on credit cards – the number of personal credit cards in circulation in July was 1.7% lower than the year before, while the amount of credit card debt attracting interest was 0.4% lower, according to the Reserve Bank of Australia. This reduction in credit card use is not only strengthening people's finances, but also their home loan applications.

That’s because while it’s certainly possible to get a mortgage if you have a credit card, lenders tend to look more favourably on borrowers who either have lower credit limits or no credit cards at all.

Why reduced credit card use can help your home loan application

• Safer profile – The less debt you have, the less risky you seem to lenders

• More borrowing power – Fewer cards and lower limits mean banks are willing to lend you more

• Easier to manage – With less plastic, it’s simpler to stay on top of your money

  
  

If you’re thinking about applying for a home loan, contact me for guidance on how to manage your credit cards and strengthen your creditworthiness.

The newsletter covered a lot of ground, including property prices, borrowing power and loan structures. Get in touch if you'd like me to compare home loans for you and ensure your loan is structured in a way that suits your goals.