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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The rule that decides how much most Queenslanders can borrow for a home is staying exactly where it is. On Thursday 28 May 2026 the Australian Prudential Regulation Authority (APRA) announced that it would keep its macroprudential settings unchanged, including the mortgage serviceability buffer of 3 percentage points. On Friday 5 June its chair, John Lonsdale, repeated the message in an opening statement to the Senate Economics Legislation Committee, and The Adviser reported the hearing on Tuesday 9 June.
For anyone applying for a loan in Brisbane, Townsville or Toowoomba this winter, the practical meaning is simple. A bank must still check that the borrower could keep paying if the interest rate were 3 points higher than the rate on offer. With the cash rate at 4.35 per cent after three increases this year, that test is being run from a higher starting point than it was in January.
APRA macroprudential update, 28 May 2026. All three settings were left unchanged.
What APRA decided
APRA reviews three settings together. The first is the serviceability buffer, which stays at 3 percentage points above the loan's interest rate. The second is the countercyclical capital buffer, a layer of capital banks hold for bad times, which stays at 1 per cent of risk-weighted assets. The third is the limit on high debt-to-income lending, which allows a bank to write up to 20 per cent of its new owner-occupier loans, and up to 20 per cent of its new investor loans, at a debt-to-income ratio of six times or more.
The regulator's 28 May statement said the outlook had changed since its previous update. Mr Lonsdale pointed to interest rates rising over recent months amid elevated inflation, and to the effect of the conflict in the Middle East on household and business costs. He said consumer sentiment and business confidence had weakened and that the risks to economic growth were tilted to the downside.
Related readFixed, variable or split: how home loan rate types work in AustraliaAgainst that, APRA said the banking system was well capitalised and able to absorb shocks, that non-performing loans remained low and that arrears were low. It described Australian households as highly indebted overall, but said strong buffers left most of them able to manage the squeeze on cash flow from inflation and higher rates.
Why the buffer was not cut
Each time rates rise, there are calls for the buffer to come down, because a 3-point margin on top of a higher rate cuts borrowing capacity further. APRA's answer in May was that the buffer is doing the job it was designed for. In its statement the regulator said the buffer helps ensure that people who have borrowed in the past few years can keep servicing their loans in the face of higher expenses and interest rates.
That is the buffer working in real time. A Queensland household that took a loan in 2024 or 2025 was assessed at a rate 3 points above what it was then paying. The three increases in the cash rate in February, March and May 2026 have used up part of that margin, and the household is still inside what its lender tested.
In a submission on housing lending to a Senate committee dated April 2026, APRA sets out the rule in one line: banks must assess a borrower's ability to meet repayments at an interest rate at least 3.0 percentage points above the loan product rate. The same document says the margin is a contingency for rising rates, a fall in income or a rise in expenses, not a forecast that rates will go that high.
Related readGreat Southern Bank grows home loans 7.6% with first buyers in frontWhat it does to a Queensland loan
The buffer is easiest to see with numbers. The worked example below is illustrative and is not market data. It assumes a 30-year principal and interest loan and a variable rate of 6.26 per cent, chosen only for illustration. It also assumes, for simplicity, that a lender has worked out the household can afford $4,000 a month in repayments after its other commitments.
| Test | Rate used | Loan that $4,000 a month supports |
|---|---|---|
| At the rate actually charged | 6.26% | About $649,000 |
| With the 3-point buffer | 9.26% | About $486,000 |
| Difference | 3.00 points | About $163,000 less |
Illustrative figures computed with the standard loan repayment formula. The 6.26% rate is an assumption. A lender's own calculation also depends on income, expenses and existing debts.
On these assumptions the buffer takes roughly a quarter off the loan. The household would pay about $3,082 a month on a $500,000 loan at 6.26 per cent, but the bank has to be satisfied it could pay about $4,117 a month, which is what the same loan costs at 9.26 per cent.
This is why a borrowing limit worked out in January may not survive to June. Each quarter-point rise in the cash rate that a lender passes on lifts both the rate charged and the rate tested. Nothing in APRA's settings has changed; the starting rate has.
The limit on large loans relative to income
The second rule Queensland borrowers may hear about is newer. APRA's information paper on debt-to-income limits says the cap took effect from February 2026. A bank may write no more than 20 per cent of its new mortgage lending at a debt-to-income ratio of six or more, measured each quarter on a rolling four-quarter basis, and the cap applies separately to its owner-occupier book and its investor book.
Two kinds of loan sit outside the cap, according to the same paper: bridging loans for owner-occupiers, because they are temporary, and loans to buy or build new dwellings. Non-bank lenders are not currently subject to it, although APRA notes that it has powers to extend macroprudential measures to lenders it does not regulate if that became necessary.
Related readPre-approval explained: what a conditional approval is and is notFor most households the cap is invisible. APRA said on 28 May that preliminary figures for the March quarter showed high debt-to-income lending remained well below the limit, although it had been increasing over the past year. In its April submission the regulator put loans at six times income or more at under 10 per cent of total lending. The cap is a ceiling the banks have not reached, not a rule that is turning away ordinary applications.
A borrower is more likely to meet it indirectly. A lender that wants to stay far from the ceiling may set its own internal limit for particular kinds of applicant, and those limits differ from bank to bank. That is one reason two lenders can give different answers to the same household.
What the regulator told the Senate
Mr Lonsdale's opening statement on 5 June was a broad account of the system's health. He said the financial system remained strong and stable, that banks and insurers were well capitalised with strong liquidity, and that stress testing showed the system could withstand a range of severe but plausible scenarios. APRA supervises institutions holding about $9.8 trillion in assets, according to the statement.
He also listed where APRA is looking: geopolitical conflict, cyber and operational risk, the pace of technological change, and lending standards at a time of high household debt and rising rates. The statement noted that the macroprudential settings had been confirmed the week before.
The Adviser's report of the hearing on 9 June recorded one exchange of interest to home buyers. Asked by Senator Kerrynne Liddle whether Treasury had sought APRA's advice on how the expanded 5 per cent Deposit Scheme might interact with house prices, Mr Lonsdale said APRA had been asked, before the announcement, for advice on the effect on lenders mortgage insurance providers, and had not been asked for advice on the wider policy impact.
Related readHow lenders work out borrowing capacity: income, expenses, bufferWho it concerns, and what comes next
Three groups in Queensland feel these settings most directly.
First are buyers who have a pre-approval or are about to seek one. Their limit is being set by a test rate above 9 per cent on a typical variable loan. If the cash rate moves again before they buy, the limit moves with it.
Second are owners who want to refinance. A household that borrowed close to its maximum before the 2026 increases can find that a new lender, applying the buffer to today's rate, will not approve the loan it already has. APRA's guidance allows banks to make exceptions to their own policy in limited numbers, and its April submission puts exceptions at under 5 per cent of new housing lending, so the door is narrow but not shut.
Third are the lenders themselves, including the banks based in Queensland. A steady buffer means no change to their systems, and a steady capital buffer means no change to the capital they must hold against home loans.
APRA gave no date for its next update. Its statement said it would stay alert for early signs of risks that could harm financial stability and would adjust its settings if needed. In practice the regulator looks at the settings again as conditions change, and the next reading on lending quality will come with its regular quarterly statistics on banks' property exposures. Until then, the number to remember when a Queensland lender quotes a borrowing limit is the rate on the loan plus three.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
