What the latest budget announcements mean for borrowers in 2026
April 2026 has brought a wave of changes to household budgets across Australia. Federal government reforms to the NDIS are expected to remove more than 160,000 people from the scheme, leaving many families thousands of dollars worse off each year. Persistent fuel costs continue to eat into household incomes. And court proceedings against Woolworths have confirmed what many shoppers suspected — grocery prices were inflated well above what they should have been. None of this happens in isolation. When your monthly expenses rise, your ability to borrow and service a home loan changes too. Understanding how cost of living pressure feeds into your home loan position is the first step to staying ahead of it.
If you want to see how your current expenses are affecting your borrowing power, running the numbers now gives you a clear picture before things tighten further.
What is changing
The federal government’s NDIS reforms announced in April 2026 are significant. Around 160,000 participants are expected to be removed from the scheme as eligibility criteria tighten. For families who rely on NDIS funding to support a child or other family member, the annual financial impact could be substantial — in some cases thousands of dollars in lost support.
At the same time, the fuel crisis linked to ongoing Middle East conflict has kept petrol prices elevated. NSW Premier Chris Minns flagged in April 2026 that the fuel situation was unlikely to improve quickly, and that the current crisis was probably not the last of its kind. That message matters for household budgets, particularly for families in outer suburbs where driving is unavoidable.
Grocery costs have also been under scrutiny. The ACCC’s federal court case against Woolworths has revealed the supermarket planned price hikes specifically to establish inflated comparison prices — meaning consumers paid more than they needed to across hundreds of products. While the legal outcome is still pending, the broader picture is clear: everyday costs have been higher than they should have been for several years.
Taken together, these pressures are not trivial. They reduce the amount of income available each month to service a home loan.
Serviceability explained
When a lender assesses your home loan application, they look at your income and weigh it against your expenses. The gap between the two determines how much you can comfortably borrow. This assessment is called serviceability.
Lenders use benchmarks to estimate living costs. These are generally based on the Household Expenditure Measure (HEM) — a figure that reflects typical spending for a household of your size and location. If your actual costs exceed the HEM benchmark, lenders may use your real expenses instead, which reduces your borrowing capacity.
When fuel bills, grocery costs and support payments all increase at once, the HEM benchmarks often lag behind the real world. This is one of the main reasons borrowing power has declined for many Australians in recent years, even when their income has not fallen. Rising living costs quietly erode the gap between income and outgoings — and lenders notice.
If you are applying for a home loan now or planning to do so in the next six months, it is worth having an honest look at your monthly expenses before you apply. Knowing where you stand helps your broker find lenders whose benchmarks best match your situation.
If you have a loan now
If you already have a home loan and your budget is feeling tight, there are practical steps worth taking now rather than waiting until the pressure becomes a problem.
Check your interest rate. Many borrowers are still on rates that were set before the RBA’s rate cut cycle. Even if your lender has passed on cuts, you may be paying more than the best available rate. Use the loan repayment calculator to see what your repayments would look like at a lower rate.
Review your loan structure. An offset account can meaningfully reduce the interest you pay each month, even when your rate stays the same. If you have savings sitting in a transaction account, moving them into an offset is one of the simplest ways to reduce your effective repayment burden.
Consider whether to refinance. If you have held your loan for two or more years, there is a reasonable chance a better deal is available. Knowing whether to refinance now or wait depends on your circumstances — a broker can run a comparison and tell you whether the numbers stack up.
Budget pressure is manageable when you act early. The worst outcome is waiting until repayments genuinely strain your finances before making a change.
Planning ahead
For buyers who are planning a purchase in the next year, the 2026 budget landscape means planning carefully rather than moving quickly.
Budget pressures in 2026 are real and are not going away quickly. But with the right approach to your home loan, they are manageable.
Common questions
Q: Will NDIS cuts affect my home loan application?
If NDIS funding forms part of your household income, changes to your payments will affect how a lender assesses your borrowing capacity. Income from government support programs is generally treated differently to employment income — some lenders may not include it at all. If NDIS payments are relevant to your application, speak to a broker who understands how different lenders treat this type of income.
Q: How does cost of living affect how much I can borrow?
Lenders use your income minus your living expenses to work out what repayments you can afford. When living costs rise — fuel, groceries, energy — the gap between income and expenses narrows. That directly reduces how much a lender is prepared to lend you. Keeping your expenses lean and your financial history consistent is the best way to protect your borrowing capacity.
Q: What should I do if rising costs are making my repayments feel tight?
Contact your broker or lender before missing a repayment. Many lenders have hardship provisions that can temporarily reduce or pause repayments. Refinancing to a lower rate or restructuring your loan may also relieve pressure without requiring you to sell. Acting early gives you the most options.