Speaking to the Financial Review Banking Summit, APRA Chair Wayne Byres said we are now entering a very different environment than what has existed for much of the past decade.

"Historically, housing loan portfolios have been low risk, and acted as ballast for the industry through turbulent periods," Mr Byres said. 

"That may not be the pattern in the future, aggregate dollar losses from housing portfolios now regularly exceed that from other portfolios in our stress tests.

"That is why APRA has been increasingly exercised (and, at times, interventionist) in recent years about the quality of housing lending, and why our proposed new macroprudential framework has a significant focus on measures to constrain housing-related risks."

In October last year, APRA boosted the serviceability buffer from 2.50% to 3.00%, projected to cut the average borrower's borrowing power by 5%.

Rising inflation and higher mortgage rates have acted to do some of APRA's work for it, with Mr Byres noting the faster-than-expected emergence of higher inflation and interest rates will have a significant impact on many mortgage borrowers with pockets of stress likely.

This is particularly the case if interest rates continue to rise quickly and, as expected, housing prices fall. 

"Of particular note will be residential mortgage borrowers who took advantage of very low fixed rates over the past couple of years, and may face a sizeable ‘repayment ‘shock’ - possibly compounded by negative equity - when they need to refinance in the next year or two," he said.

For example, the Commonwealth Bank has $89 billion in fixed home loans expiring in 2023.

APRA intends to keep an eye on the experience of borrowers who have borrowed at high multiples of their incomes, with the cohort growing significantly over the past year as a result of record low interest rates. 

The regulator notes this growth has not been an industry-wide development, but rather has been concentrated in just a few banks.

"We expect lending policy changes at those banks, coupled with rising interest rates, will see the level of high DTI borrowing begin to moderate in the period ahead," he said.

ANZ, NAB tighten debt-to-income caps

ANZ has altered its debt-to-income (DTI) ratio, revealing from 6 June it will no longer accept new home loan applications from borrowers with total debts more than seven and a half times their income, down from nine times.

Speaking to the Financial Review Banking Summit, ANZ Head of Retail Banking Maile Carnegie said ANZ's reduction in the DTI cap was in part a response to APRA's standards tightening. 

Alongside ANZ, NAB has also made moves having recently cut its debt-to-income ratio limit from nine times to eight times.

APRA considers a DTI of more than six times as being high.

Investor lending steams ahead as owner occupier growth slows

RBA data released Tuesday shows annualised housing credit growth for owner occupiers for April is back to November 2021 levels.

It sits at 9.0% for owner occupiers, while investment lending growth hit 5.8% - the highest level since January 2016.

Read more: Mortgage rates at pre-pandemic levels as average home loan size soars

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
 Featured Online ExclusiveUp To $4K Cashback
  • Immediate cashback upon settlement
  • $2,000 for loans up to $700,000
  • $4,000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
 Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
 Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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