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Australia’s banking regulator, APRA, has introduced new lending rules that will reduce the maximum amount some people can borrow.

When you apply for a mortgage, lenders are required to assess your ability to repay the loan not on the actual interest rate, but on the interest rate plus a buffer.

Previously, the buffer was a minimum of 2.50 percentage points; now, APRA has told lenders to increase it to 3.00 percentage points. So if you applied for a loan with an interest rate of 2.09%, lenders would have to assess whether you could repay the loan if the rate increased to at least 5.09%.

APRA expects this change will reduce the average person’s borrowing capacity by about 5%.

However, each person’s situation is unique. Some borrowers may not experience any reduction in their borrowing capacity. Others might experience a larger impact. In this new home loan environment, it’s never been more important to get help from an expert broker who’s fully across the new rules.

As your broker, we can:

  • Maximise your borrowing capacity so you can buy your dream home
  • Show you how your borrowing capacity can change from lender to lender
  • Compare dozens of lenders and hundreds of loans for you

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