As we move into the second half of 2024, we are seeing some significant increases to many customers home loan borrowing capacity due to the new tax cuts that came in effect on July 1.

Key highlights of the new tax cuts include adjustments to income tax brackets, capital gains tax rates, and corporate tax structures.

In addition to the Government’s aim of stimulating growth and relieving some of the high costs of living in Australia, one of the immediate and tangible effects of these tax adjustments is the potential increase in borrowing capacity for individuals and businesses alike.

With housing affordability at its worst level in 30 years, borrowing capacities fell by around 30% since home loan rates started to increase in May 2022, making these new increases are a welcome relief.

Here’s how these changes may play out:

1. Lower Personal Income Taxes: With revised income tax brackets likely offering lower rates or adjusted thresholds, individuals could retain more of their income. This can positively impact their ability to service debt and may improve their creditworthiness in the eyes of lenders.

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2. Enhanced Business Viability: Reduced corporate tax rates or favorable adjustments could bolster profitability for businesses. This, in turn, might enhance their borrowing capacity by improving cash flow and financial health indicators.

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3. Investment Incentives: Changes to capital gains tax rates could make investment properties or other asset acquisitions more attractive. This could lead to increased demand for loans, particularly in the property market, as investors seek to capitalize on these incentives.

Contact an Assured Lending Mortgage Broker to assess your borrowing capacity today

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