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Tax Cuts Increase Borrowing

Tax Cuts Increase Borrowing

Investors may be able to improve their borrowing capacity thanks to the Federal Government’s July 1 tax cuts.

Continual interest rate rises in the past two years mean levels of borrowing have been seriously curtailed for some investors, but according to an analysis done by Shore Financial, the new financial year tax cuts may have improved that situation.

It says borrowing capacity would increase by 4% for those with an income of $90,000 and 5% or more for those with an income of $100,000 or more.

According to Mortgage Choice broker, James Algar, the borrowing capacity of a buyer with a $100,000 income could increase by about $25,000 while someone earning $150,000 could borrow about $37,000 more.

PropTrack says the substantial lift in interest rates since 2022 means that maximum borrowing capacities have been reduced by about 30%, resulting in significant decreases in potential loan amounts and budgets for buyers.

It says this pushed buyers toward more affordable options, particularly the unit market, which is experiencing a surge in demand as a result.

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