- Record investor lending doesn't pose the same threat to the financial system as it did in the past, one economist says
- The comments come as the banking regulator APRA released a new report singling out riskier investor loans as "a key vulnerability"
- Some commentators believe APRA will step in to limit risky investor lending, but Domain's senior economist said there is little need for a broad-scale crackdown on new investor loans
Banking regulator APRA is likely to make only minor changes to manage riskier investment lending than impose a widespread crackdown on new investor loans, Domain senior economist Joel Bowman (pictured above) said.
Investor home lending is at record levels, heightening speculation APRA will impose controls on banks issuing new investor loans as it did more than a decade ago.
From 2014 to 2018, banks were required to restrict new investment lending, particularly around high loan-to-value ratio (LVR) loans and interest-only borrowing.
But Dr Bowman told the Savings Tip Jar podcast the "financial stability" case for APRA to act as it did a decade ago is less clearcut.
"High debt-to-income lending has shifted lower since 2022 and has remained at those low levels since, so there's little sign there's been a material pick up in high risk lending by and large," he said.
"In addition, borrowers with cash flow shortages remain low and have been declining as well.
"Arrears rates are also very low. That's certainly the case for the big four banks, having gone through their latest reports."
Quarterly bank statistics, published by APRA in September for the June quarter, show new investment lending over the debt-to-income ratio benchmark of six-times reached just over $10 billion.
That's down considerably from the recent peak of more than $40 billion in December 2021.
Dr Bowman said, historically, lower interest rates have been linked to riskier lending and the growing prospect of no further rate cuts should ease those concerns.
Listen to the full chat with Dr Bowman on record investor lending in Australia.
Regulator on the job
But APRA has revealed it has identified a "pick-up" in higher risk mortgage lending, particularly high debt-to-income borrowing by investors.
Its new System Risk Outlook report, released on Thursday, cites growth in investor home loans and high household debt as creating vulnerabilities in the banking system, heightened by global geopolitical volatility.
While the report confirms Australia's financial system is well positioned, it singles out housing as "a key vulnerability".
It cites concerns that Australia's gross household debt, at 1.8 times income, has remained historically and internationally high for almost a decade.
"Given high household debt and [housing] prices continuing to rise, we are carefully monitoring these risks and ensuring banks are prepared to implement additional macroprudential tools where required to reinforce lending standards," APRA chair John Lonsdale said.
Some commentators have interpreted this as suggesting APRA is preparing to stage a new intervention in the lending market.
APRA said it is currently "engaging" with lenders on potential curbs to slow concerning lending activity amid "heightened competition for new lending".
See also: Investor home loans narrow rates gap
What could APRA do?
In 2014, APRA stepped in to prevent lenders from achieving more than 10% annual growth in investor home loans.
It was followed in 2017 by another limit on interest only (IO) lending, often favoured by investors looking to maximise tax benefits, cashflow, and leverage.
See also: How can property investors minimise tax?
The limits were removed in April 2018, conditional on bank boards providing assurance of ongoing safe lending practices.
The most recent tinkering from APRA was in October 2021 when banks were required to add a 3% buffer to all loan serviceability assessments, up from the previous level of 2.5%.
While Dr Bowman said he believes any upcoming changes are likely to be minor, it remains to be seen how APRA plans to intervene.
The regulator's new report landed on the same day as Domain's 2026 Property Forecast Report, predicting every capital city will see record prices over the next year.
This would be driven by lower interest rates, higher household incomes, and a wave of first homebuyer demand under the federal government's 5% Deposit Scheme.
The Domain report expected investors will continue to see strong returns from high rental yields and early-2026 capital growth, adding fuel to record investor lending.
See also: Top Australian Suburbs for Rental Yields Revealed 2025
However, investor activity is forecast to ease later in the year as new housing supply and competition builds in the market.
The report doesn't mention the possibility of any curbs to new investor lending, although the prospect has been noted by several property analysts in recent months.
APRA has given no indication of any timeframes but said it will publish its newly launched System Risk Outlook report twice a year.
Watch the full Savings Tip Jar podcast episode, featuring Domain senior economist Joel Bowman via YouTube.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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| Promoted | Disclosure | ||||||||||
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| Promoted | Disclosure | ||||||||||
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| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
