Summary
In this episode of The Perth Property Show, host Trent Fleskens sits down with WA’s top mortgage broker Sam Carrello to unpack the current state of mortgages in Western Australia. From expected RBA rate cuts to borrowing power shifts and government incentives, it’s a timely deep dive for anyone looking to understand their next move in the housing market.
- More interest rate cuts are on the horizon and what this means for borrowing capacity.
- Current mortgage rates in WA.
- Government policy changes impacting mortgages.
- First Home Schemes and what’s currently available.
- Final thoughts about a market in transition.
Podcast Episode
Episode Transcript
Interest Rate Cuts Are on the Horizon
Markets and banks alike are forecasting interest rate cuts across 2025. NAB, for example, expects a 1% cut by August, while other big banks like ANZ and Westpac are similarly predicting reductions over the coming 6–12 months. The RBA’s target inflation band of 2–3% seems within reach, suggesting the current cash rate may be higher than necessary. If this plays out, we could see owner-occupier loan rates drop from the high 5s to the mid-to-high 4s by early next year.
What This Means for Borrowing Capacity
As rates go down, borrowing power goes up. For every 25 basis point rate cut, a borrower earning $100,000 per year can access around $15,000 more in loan capacity. If the full 1% cut forecasted by NAB is realised, that same borrower could gain up to $60,000 in extra borrowing capacity. Here’s a quick example:
- Current lending: ~$520K–$550K for someone earning $100K annually
- Post-cut potential: ~$600K+ with lower interest rates factored in
This could make a significant difference in Perth’s increasingly competitive market, where many buyers are struggling to keep up with price growth and repeatedly missing out on properties due to borrowing limits.
Current Mortgage Rates in WA
At the time of recording, the sharpest owner-occupied principal and interest rates are sitting at around 5.89% with 100% offset (e.g. ING). Most lenders are in the 5.89%–5.99% range for 20% deposits. With rate cuts expected, these could fall into the high 4s within 12 months, providing much-needed relief for households and increasing serviceability across the board.
For investors, principal and interest rates are still around 5.99% if your LVR is under 70%, but interest-only loans remain higher – typically 6.3% to 6.4%.
Government Policy Changes Impacting Mortgages
1. HELP Debt Reassessment (CBA)
CBA has introduced new servicing rules around HELP/HECS debt. If a borrower is likely to pay off their HELP debt within a year, it may be excluded from servicing calculations. If it’s likely to be paid off within five years, a desensitised rate is applied – improving serviceability for many.
2. Rental Income Consideration
CBA is also leading in recognising boarder or subletting income. If a buyer intends to lease out a room and signs a statutory declaration to that effect, $150 per week in income can be added to their serviceability profile—helping buyers qualify for larger loans.
3. Refinancing for ‘Mortgage Prisoners’
For borrowers stuck in high-interest loans they no longer qualify to refinance due to the 3% serviceability buffer, several banks (including CBA, Westpac, ANZ, NAB and Bankwest) are now offering alternative assessments. If a borrower has held the loan for at least 12 months with good repayment conduct, some lenders will apply a reduced buffer (as low as 1%) – unlocking better rates for previously “trapped” homeowners to refinance their home loan.
First Home Schemes: What’s Available Now
First Home Guarantee
Allows eligible buyers to purchase a home with as little as a 5% deposit (plus stamp duty), without needing LMI. This is currently one of the most attractive options for those with smaller deposits who still want access to strong interest rates – often around 5.99%.
Help to Buy Scheme (Proposed Federal Policy)
This proposed co-ownership scheme would allow the government to buy up to 40% of a home alongside eligible buyers, significantly reducing the mortgage size needed. Originally capped by income, the new proposal removes income limits and raises the WA price threshold from $600K to $850K. This opens the scheme to more buyers – but as Sam notes, it’s likely to drive demand (and prices) up even further.
Final Thoughts: A Market in Transition
For buyers, particularly first-home buyers and upgraders, the next 6–12 months could be game-changing. As rates ease and government policies expand access to lending, many West Aussies may find themselves with improved borrowing capacity – and renewed urgency to act before prices climb again.
At Strategic Mortgages Perth, we’re here to help you understand your borrowing potential, navigate these changes, and secure the best loan for your needs.
Want to know how these changes affect your situation? Get in touch with our expert team today.
