With three interest rate cuts and a strong possibility of more to come, many mortgage holders are unlocking the equity in their home loan to fund much longed-for renovations, a car, or an investment purchase.

The amount of equity – the difference between the value of your home and the amount remaining on your mortgage – is something that University of Adelaide master of property Peter Koulizos says many do not realise how much they have amassed.

“Many people don’t realise the equity they have in their home,” he says. “It’s like a sleeping giant that can slingshot you into a comfortable retirement.

“The equity is sitting there doing the thing where you can put it to work and work for you and your family.”

While using equity can be tempting, Mr Koulizos cautions against various uses.

“If you want to borrow against your house, it should be to buy an appreciating asset, whether that is investing in property or investing in shares,” he says.  

Using your equity

Perth-based Mortgage Choice broker Mila Cross explains using your equity is essentially taking tangible cash out of your home loan and increasing the current limit to access much needed funds.

 “Customers can tap into their equity to provide some needed funds for a significant home renovation, debt consolidations… buying a car, going on a holiday, those kinds of things,” she says.

“But just because you can, doesn’t always mean that you should.

“In regard to putting tangible items like a car on top of it (your mortgage) you’re going to be paying interest on that portion over the debt for a longer timeframe.

 “So I always tell my customers, they should be mindful if you are refinancing a car, (it) decreases in value, and you’re putting that extra money onto your home loan, and you need to be mindful that if you make the bare minimum of payments, it’s going to take you 30 years to pay off that car.

“You’re going to be paying a lot extra than what you would be if you just got a higher rate and had that car loan by itself.”

How it works

Ms Cross provided the following example as to how a mortgage holder – let’s call her Jane – could take out funds for renovations.

The current value on Jane’s property is $971,000 and she wants to take out $200,000 to fix her roof and fund other renovations, potentially a new kitchen.

Withdrawing the money will take Jane’s loan-to-value ratio to 61%.

“Her current rate is quite high, so she’s currently with another lender, and her rate is at 7% and we are going to be able to decrease their rate a lot and still be able to do those home renovations and still be able to pay off their property,” Ms Cross explains.

The risks to consider

While using equity can be a helpful tool for some, like anything it comes with risks, Ms Cross warns.

“Property values could decrease, so then the customer is over capitalising,” she says.

“At the moment, prices are showing that homes are valued at a lot more, but we don’t know if they’re going to come down, or what they’re going to actually do.

“Customers really need to be front of mind in regard to that aspect.”

The median price of a home in Australia is now at a record-high $827,000 after 4.9% growth in the national market over the 12 months to July, according to PropTrack data.

It is also worth considering that accessing equity also equals increased debt. Ms Cross says it is important for homeowners to really consider whether they can afford it.

“At the moment, you might only owe $300,000. Do you really want to increase to $500,000?” she says.

While Australia does not look set for any cash rate rises in the near future, Ms Cross says it is vital people consider the risks of taking out equity properly.

Being able to afford those higher repayments if interest rates increase again is a crucial consideration.

Understanding the property market cycle

Mr Koulizos says the ups and downs of the property cycle needed to be kept in mind if using equity to buy an investment property.

 “It’s not all upside in property investment,” he notes. “There are downsides… property prices can come down, you will have tenants and not everything goes perfectly with the tenants all the time, but you have to understand the risks.

“But generally speaking, if you allow time to take its course, the admiral of investing in property far outweigh the disadvantage.”

AMP head of investment strategy and chief economist Shane Oliver warned while using home equity is simpler than taking out a new loan for an investment purchase, the downside is the family home is on the hook.

What lies ahead?

With two interest rate cuts so far this year, there is indication that more mortgage holders are tapping into their equity, Mr Oliver says.

“I think we are already seeing early signs of that, arbitrary clearance rates have gone up to above average levels for this time of year,” he says.

“That’s partly reflecting increased confidence on the part of buyers citing lower interest rates, ( and house) prices are now up five months in a row.”

The Reserve Bank of Australia will make its next decision on the cash rate in late September. 

This article first appeared on Mortgage Choice and has been republished with permission.

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Sydney homes have attracted massive competition at auction over the past week, with low stock and high levels of buyer demand pushing prices well over reserve.

Preliminary figures indicated about 80 per cent of scheduled auctions produced a sale in Sydney last week – a figure normally associated with a red hot market where sellers can call the shots.

Auctioneers confirmed that demand has heavily outstripped supply.

Ray White NSW head of auctions David McMahon said weekend auctions exceeded expectations.

“With the recent updates of the First Home (Guarantee) scheme we were anticipating competitive bidding in the sub-$1.5m range,” he said.

“But, in fact, we experienced competitive bidding across all price points today.”

Mr McMahon suggested that auction volumes were on the rise in the lead up to spring, with Saturday experiencing the highest volume of scheduled auctions for the new financial year.

Competitive spirit was exemplified in an auction at Oakhill Dr in Castle Hill, where Benson Auctions director Stu Benson said a “bidding war” took place.

The property sold for $3.5m, a price $250,000 over reserve.

Mr Benson said the buyers –– a young family of four –– competed with five other bidders over the course of the “hotly contested” auction.

According to Mr Benson, the Hills Shire has been a hotbed for auction sales.

“This is the strongest buyer activity I’ve seen here in the northwest for at least two years,” he said.

“This is my third weekend of a (personal) clearance rate of above 90 per cent here in the Hills Shire, with just over 30 per cent of properties listed for auction being sold prior to auction,” he said.

“Vendors who are setting reserves which buyers can reach are being rewarded by the competition of a low-stock market.”

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Auctioneer Chris Scerri said sellers were looking to get the best price out of their homes while stock was still low.

“They’re the ones that have had the jump on the other properties that are coming onto the market,” he said.

“Stock levels are still low, but that’s certainly changing as we speak.”

An indicator of the current state of the market, Mr Scerri said 100 per cent of his team auctions lead to sales over the weekend.

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One auction on Fitzwilliam St in Toongabbie saw a sale $202,000 above reserve.

The entry-level three-bedroom, one-bathroom home sold for $1.502m.

Mr Scerri said the home was purchased by an elderly couple as an investment property for their daughter.

Across the market, Mr Scerri said the bidders were no longer waiting to get involved.

“Hesitation has disappeared,” he said. “People are flying out bids left, right and centre now.”

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In Auburn, a home in the same family for 58 years sold under the hammer for $1.735m on Saturday.

The Edgar St home was sold by three siblings, whose family have owned the home since 1968.

One of the sellers, Paul, said it was the first auction he had ever attended.

“It was quite exciting and nerve-racking,” he said. “I was on the phone to my sister and she was getting excited when it got to $1.5m.”

There were 11 registered bidders for the auction, with six of them being active on the day.

Paul said it was an emotional day for the family.

“I was only eight years old when we moved in,” he said. “I had very happy family memories there, so it was a bittersweet sale but we are very happy with the result.”

The home sold for $235,000 over reserve.

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Another Castle Hill auction saw a three-bedroom home on Cecil Ave sell for $2.17m.

Scerri Auctions auctioneer Craig Robinson said 66 bids were placed during the auction, with the home selling for $270,000 above the owner’s expectations.

“Four buyers were fighting it out, then it just came down to two,” Mr Robinson said.

It is understood the buyer purchased the property as an investment.

Mr Robinson said the home was previously sold for $1,050,000 in 2019, less than half of what it sold for on the weekend.

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A South Yarra townhouse made famous on The Block is hitting the market again, nearly a decade after it delivered one of the show’s most dramatic auctions.

The three-bedroom, two-bathroom residence at 3/27 Darling St will go under the hammer late next month with a $1.9m-$2.09m price guide.

It was one of four 1970s flats overhauled in the 2015 Triple Threat season, where Gold Coast couple Ayden and Jess Hogan turned a drab shell into a striking architectural home featuring a soaring triple-height entry, cascading vertical garden and a statement staircase that earned a perfect 10 from judge Neale Whitaker.

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Their bold design paid off at the finale when the property sold for $2m — a staggering $665,000 above reserve — in a life-changing result that left the pair in tears on national television

Marshall White Stonnington’s Ella Atkins, said the property still carried that same jaw-dropping wow factor.

“It’s one of those architectural moments you don’t forget,” Ms Atkins said.

“The volume of space, the natural light and the lush green wall instantly set it apart.

“People who walk through after seeing a dozen other homes in a day will remember this one.”

The home’s centrepiece is an expansive open-plan living and dining area that flows through full-width bi-fold doors to an indoor-outdoor entertaining terrace.

A designer kitchen with butler’s pantry and ethanol fireplace anchors the space, while the indulgent main suite takes over the top floor with a walk-in wardrobe, study, library and marble ensuite with underfloor heating.

Two additional bedrooms, a retreat and another bathroom round out the accommodation, while a three-car basement garage with wine cellar adds rare practical luxury in South Yarra.

Ms Atkins said the property had already sparked interest from downsizers, professionals and prestige investors.

“This is the ultimate lock-up-and-leave base,” she said.

“You’re metres from Toorak Rd, the Botanic Gardens and the station, yet tucked away enough to feel private.

“And having two and a half secure car parks at this level is almost unheard of in the area.”

Since its TV debut, the property has carved out a second life as a prestige rental, most recently leasing for $1400 a week.

According to a BMT Tax Depreciation estimate, it could have delivered up to $385,872 in tax savings for the current owner while leased. However, changes to federal depreciation rules mean the next buyer will not be able to access the same level of benefits.

Ms Atkins said the townhouse would stand out during what is tipped to be one of Melbourne’s busiest spring selling seasons since before Covid.

“It’s incomparable to other home’s on the market, you won’t see another quite like it,” she said.

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After a surge in June, the July 2025 building approval figures tell a different story – prompting industry bodies to call for urgent action. 

In July 2025, the total number of building approvals fell 8.2% to 15,769 according to the latest seasonally adjusted numbers from the Australian Bureau of Statistics (ABS).   

The fall comes after June recorded the highest level of approvals since August 2022.  

July’s decline was driven largely by a 22.3% drop in approvals for private dwellings excluding houses – a category that covers apartments, semi-detached homes and townhouses. 

Last month, this specific category also saw its highest rise since December 2022, jumping 33.5%.  

Across the states, results were mixed. New South Wales and South Australia fell by 24.6% and 1.3% respectively in overall aprovals, but Tasmania, Western Australia, Queensland and Victoria rose by 12.2%, 11.8%, 5.8% and 0.7%.  

Detached house approvals rose 1.1% to 9288, rebounding after a 1.9% fall in June. 

“New South Wales and Western Australia had the strongest rise in private sector house approvals, with both states up 3%,” ABS head of construction statistics Daniel Rossi said.  

“Victoria gained 1.3% and has risen for a fourth consecutive month. South Australia was the only state to record a fall, down 6.1%,” he added. 

A mixed bag for housing supply 

While June’s figures were the strongest in nearly three years, industry bodies say Australia still has a long way to go to meet its housing targets. 

To achieve the National Housing Accord’s goal of 1.2 million new homes by 2029, the nation needs to be building 20,000 homes each month. Completions should be higher than that, as inevitably some projects will never get off the ground. 

According to the Property Council of Australia, July’s numbers were “a disappointing step back after two months of rising home approvals”.  

Property Council executive policy and advocacy Matthew Kandelaars said while progress has been made on planning and zoning reforms, momentum needs to be sustained.  

Just last week, the federal government announced it would pause further updates to the National Construction Code to help reduce delays in home building.  

“Progress is being made, but the supply pipeline remains constrained, as these numbers show,” Mr Kandelaars said.  

“Apartment approvals can be volatile, but it is still disappointing to see a significant drop over the month.”  

Despite July’s dip, Mr Kandelaars noted that approvals have improved over 12 months.  

“Overall home approvals are up 6.6% from the same time last year, while private sector dwellings excluding houses approvals rose 12.5%,” he said.  

The Housing Industry Association (HIA) welcomed the rise in detached house approvals, especially with the potential impact the 5% deposit guarantee can bring.  

HIA senior economist Maurice Tapang said initiatives targeting first home buyers can have a significant effect.  

“Around a third of all new homes are built by first home buyers, and in the long-term, initiatives that reduce the cost of first home buyers entering the market will lead to an increase in new home commencements,” Mr Tapang said. 

He also pointed out the role of interest rate cuts in supporting demand.  

“With three interest rate cuts having been delivered this year, more households are expected to return to the market to purchase a home,” he said.  

“Strong demand for housing in the established market is expected to continue filtering through to the new home market, as building a new home becomes relatively more appealing.”  

Are you interested in the latest in buying and building new? Check out our New Homes section. 

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