Finance Update: April 2025

Housing has been a key theme of the election, so new policies are likely no matter who wins. In this Finance Update: April 2025, we also explore the latest news making headlines in finance, property and the economy.

  • RBA reveals positive mortgage data
  • Inflation keeps trending down
  • Investors weathering a cash flow storm
  • Building cost growth hits 15-year low

The Reserve Bank of Australia’s latest data brings good news for homeowners in this Finance Update: April 2025, highlighting improved mortgage stability.

The Reserve Bank of Australia (RBA) has found “the vast majority of borrowers would remain able to service their debt under a range of plausible economic scenarios”, according to the central bank’s latest Financial Stability Review.

Crucially, about 97% of borrowers have positive cash flow, which means they’re able to meet their mortgage commitments and potentially get ahead on their mortgage.

Furthermore, less than 1% of borrowers are currently in negative equity (i.e. their property is worth less than their outstanding mortgage), which is “a meaningful improvement” from before the pandemic.

“Large liquidity and equity buffers would enable most households to navigate a period of higher-than-expected inflation and interest rates or a significant deterioration in the labour market,” the RBA said.

“Even when faced with a severe 30% decline in housing prices, around 9 in 10 mortgagors would still have positive equity. These borrowers could sell their home, albeit a disruptive and last resort solution, for at least the outstanding balance of their loan if faced with severe stress.”

Everyone has a unique scenario, which is why it’s important to talk to an expert about your specific situation. If you’re struggling to meet your repayments, your mortgage broker and lender can help.

The latest inflation data, which were recorded before the USA’s recent series of tariff announcements, show further progress in the battle against inflation, making future interest rate cuts more likely.

The annual headline inflation rate fell from 2.5% in January to 2.4% in February, according to the Australian Bureau of Statistics, which was the seventh consecutive month it had been within the Reserve Bank of Australia’s (RBA) target range of 2-3%.

Also, the annual trimmed mean inflation rate (which the RBA regards as more reliable, because it excludes items with wild price swings from inflation calculations) fell from 2.8% in January to 2.7% in February, which was the third consecutive month it had been within the target range.

The RBA has kept interest rates quite high over the past three years, to reduce demand from the economy and put downward pressure on inflation.

If the RBA believes inflation is now under control, it may consider reducing the cash rate at its next monetary policy meeting in May, which would prompt lenders to reduce their mortgage rates. That said, the RBA may place even greater weight on the global instability caused by the tariff issue when deciding whether to change the cash rate.

Surveys of property investors have confirmed that although investing can be a fantastic way to build long-term wealth, investors need to be prepared to weather periods of negative cash flow, especially in the early years.

The Property Investment Professionals of Australia (PIPA) found that 65% of the investors they surveyed were negatively geared in 2024, up from 57% in 2023.

PIPA chair Nicola McDougall said the results confirmed that being a property investor involves both upsides as well as challenges.

“Interest rates remain significantly higher than they were a few years ago and while rents have risen, they are a drop in the ocean compared to higher lending costs,” she said.

If you’re a property investor, here are five tips for managing your financial position:

  • Build a cash buffer to cover periods of negative cash flow
  • Factor in rising interest rates when budgeting future costs
  • Work with an accountant to maximise your tax deductions
  • Review your loan regularly to ensure it’s still competitive
  • Speak with a mortgage broker to explore refinancing or restructuring options

If you’re thinking about buying an investment property or ensuring an existing investment loan is structured correctly, I can help.

As we round out this Finance Update: April 2025, investors are reminded to prepare for changing conditions with strong cash flow management and expert advice.

Growing Your Small Business

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Growing Your Small Business: A Guide to Funding, Forecasting, and Managing Growth

As a small business owner, growing your business can be an exciting journey, but it also comes with its fair share of challenges—particularly when it comes to funding. Scaling up means taking on more risk, planning for the future, and ensuring you have the right resources to keep up with demand. Let’s explore how you can fund your growth, manage your expansion effectively, and make strategic forecasts that help guide your decision-making.

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Funding Business Growth

Expanding a small business often requires additional capital. Whether you’re looking to hire more staff, purchase new equipment, or expand into a larger facility, you’ll need to explore funding options that best fit your goals and financial standing. There are several avenues to consider:

  1. Traditional Business Loans: Banks and financial institutions offer business loans tailored to growth. With a strong credit history and a solid business plan, you may qualify for competitive interest rates. However, it’s essential to assess your repayment capacity to avoid putting unnecessary strain on cash flow.
  2. Lines of Credit: If you prefer flexibility, a line of credit allows you to draw funds as needed. This is ideal for covering unexpected expenses or managing seasonal fluctuations. The key here is to use the credit wisely, ensuring you’re not borrowing more than your business can comfortably repay.
  3. Government Grants and Incentives: Depending on your industry and location, there may be government grants and incentives to support small business growth. These can provide a much-needed financial boost without the pressure of repayment.
  4. Private Investment or Partnerships: If you’re open to bringing in external partners, venture capital, angel investors, or private equity could be viable options. Keep in mind, this often means sharing control or ownership, so it’s important to weigh the pros and cons carefully.
  5. Self-Funding or Bootstrapping: For those who prefer to maintain full control, reinvesting profits into the business is an option. While this may slow down the pace of growth, it allows you to expand without taking on debt or diluting ownership.
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Forecasting for Growth

Growth isn’t just about having the funds in place—it’s also about knowing where you’re headed. Forecasting helps you anticipate the future and plan your next steps accordingly. Here’s how to effectively forecast for your business growth:

  • Revenue Projections: Start by estimating how much revenue your business can generate over the next few months or years. Be realistic—while optimism is great, it’s crucial to base your projections on actual market trends and your business’s historical performance.
  • Expense Management: As you grow, your expenses will increase. This includes staffing, production costs, marketing, and operational overhead. Make sure to factor in these new costs when forecasting your budget, and always leave room for unexpected expenses.
  • Break-even Analysis: Knowing when you’ll hit the break-even point is essential in growth planning. This analysis shows when your business’s revenue will cover all expenses, helping you determine how quickly you can start turning a profit after expansion.
  • Cash Flow Forecasting: Cash flow is the lifeblood of any business. A cash flow forecast allows you to predict the timing of incoming and outgoing funds, ensuring you’re not caught off guard by shortfalls, especially during times of rapid growth.
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Managing Growth: Key Milestones

Funding and forecasting are the foundation of growth, but managing the process effectively is where many businesses stumble. Here are some key milestones and strategies to keep in mind as you scale:

  • Hiring and Team Expansion: One of the first signs of growth is the need to expand your team. As your business grows, you’ll need to consider not just hiring more people, but hiring the right people. Developing a recruitment strategy and nurturing company culture becomes increasingly important as you scale.
  • Infrastructure and Operations: Growth often requires investment in infrastructure—whether that’s physical space, technology, or equipment. Before making these commitments, ensure your business has reached the necessary scale to support these investments without overstretching resources.
  • Customer Retention and Expansion: As you grow, your existing customers become even more valuable. Focusing on customer retention can ensure stable revenue streams, while customer feedback can help you refine your offerings and attract new business.
  • Adaptability and Risk Management: Rapid growth can expose your business to new risks. It’s important to remain flexible and agile, ready to pivot when necessary. Regularly reviewing your business plan and financial forecasts allows you to adjust to market changes and keep your growth on track.
Conclusion

Growing a small business is a dynamic and complex process. It requires careful planning, strategic funding, and consistent management. By leveraging the right financial tools and forecasting accurately, you can manage your growth sustainably and achieve long-term success. Remember, every growth stage comes with its own set of challenges—but with the right approach, you’ll be well-positioned to overcome them and thrive.

At Bayland Finance, we understand the unique challenges small businesses face when scaling. We’re here to provide the insights and support you need to make informed financial decisions as your business grows.