Key takeaways
What's ahead for money and finance in 2025?
Millions of Australians could see financial relief with changes afoot in 2025 aimed at easing cost of living pressures.
Potential rate cuts, easing inflation, cash boost for support payments and more options for first home buyers
So what will 2025 bring?
According to Canstar, millions of Australians could see financial relief in 2025 with changes afoot aimed at easing cost of living pressures.
S0 let's look at 8 ways you may be better off financially in this new year
1. Rate cuts:
While RBA cash rate cuts are not guaranteed, they are highly likely with all big four bank economic teams expecting cash rate cuts in 2025.
While economist keep changing their mind about the the timing of the first cut and number of cuts we will enjoy, just two rate cuts in 2025 could see a typical borrower’s monthly repayment drop by $181, if they had a $600,000 debt with 25 years remaining.
| Big four bank cash rate forecasts | ||
| No. cuts in 2025 | Drop in monthly repayments by end of 2025 - $600K loan | |
| CBA | 4 - starting Feb | $358 |
| Westpac | 4 - starting May | $357 |
| NAB | 3 - starting May | $269 |
| ANZ | 2 - starting May | $181 |
| Source: www.canstar.com.au. Based on an owner occupier with the RBA av. rate of 6.33%, $600,000 loan and 25 years remaining. Assumes banks pass cash rate cuts on in full. Note NAB is forecasting 2 more cuts in 2026. | ||
2. Easing inflation:
We are over the peak of inflation, and while the price of most goods and services won’t be falling, the Reserve Bank expects prices to rise at a more sustainable pace in 2025.
The RBA expects headline inflation will rise in the second half of 2025 with the end of the electricity rebates, however, trimmed mean inflation, which takes out irregular or temporary price changes, will hit the top of the central bank’s 2-3% target band by mid-next year, and drop to 2.8% by the end of 2025.
Of course that's what they're waiting for in order to start lowering interest rates.
Source: ABS, RBA Statement of Monetary Policy, published Nov 2024.
3. Boost to support payments:
A range of support payments are increasing from 1 January 2025 in line with inflation.
Income and asset thresholds will also increase.
This includes:
- Youth Allowance and Austudy: Payments will increase by up to $30.60 per fortnight.
- ABSTUDY: Payments will increase by up to $54.00 per fortnight.
- Youth Disability Support Pension (under 21s): Payments will increase by up to $30.10 per fortnight.
- Carer Allowance: Payments will increase by $5.70 per fortnight.
4. Pay rise for aged care workers:
Minimum pay rates will increase for eligible employees working in the aged care sector, including direct care workers, general care workers and aged care employees.
5.Medicare safety net thresholds increase:
The amount people have to spend on out-of-hospital medical expenses before qualifying for a higher rebate is increasing in line with indexation.
6.Health insurance extras cover reset:
Over 80% of health insurance funds on Canstar’s database reset members’ annual extras limits on 1 January.
Evaluate your extras cover: compare what you’ve paid over 12 months to what you’ve claimed.
If it’s not adding up, Canstar suggest you consider switching to a better policy.
7. Help to Buy to provide another way in for first home buyers:
The Help to Buy scheme, which was passed by the Australian Parliament on 27 November 2024, will allow eligible lower-income first home buyers to co-purchase a property with the government using a deposit of as little as 2%, with 40,000 places over four years.
This program is still subject to some states passing legislation of their own before it can start.
8. Superannuation to be paid on Parental Leave Pay:
From 1 July 2025, eligible parents will be paid super guarantee equivalent payments while on government-funded Parental Leave Pay.
The Superannuation Guarantee is also making its final legislated increase to 12% on 1 July 2025.
What does this mean for you?
Canstar’s data insights director, Sally Tindall, says:
“2024 has been one of the toughest 12 months financially for millions of households battling rising rents or super-sized mortgage repayments, on top of ever-growing grocery bills and other essential expenses.
“While 2025 should bring some relief to borrowers in the form of RBA rate cuts, no one knows for certain when they will land. In fact, there’s no iron-clad guarantee we’ll see cuts next year at all.
“If you have a mortgage, don’t just cross your fingers and hope for the best. Get on the front foot over summer by knocking down your interest rate as far as possible, either by haggling or refinancing.
“That way, when RBA cuts do finally come you can have your cake and eat it too.
“The annual indexation of key support payments will be welcome relief for anyone living off these funds. While for many households, this extra money won’t come close to bridging the budget black hole, it will play a small part in helping these families pay for everyday essentials.
“The government’s much-anticipated Help to Buy program, when it does finally get up and running, will provide lower income first home buyers with another potential path on to the property ladder.
“While it does nothing to put a lid on property prices, which is typically the biggest hurdle for first home buyers, it gives low and middle income Australians the ability to own at least part of their own home while limiting the amount of debt they take on.
“Finally, take time in the New Year to set up, not just a budget, but also financial goals for the next 12 months.
Having a strategy for your finances will give you a clear idea of what you want to achieve in 2025 and a better understanding of the steps you’ll need to take to get there.”
