21350 – Banking & Lending Regulation

Banking & Lending Regulation (21350) records the rules the Australian Prudential Regulation Authority (APRA) sets for how banks and other authorised deposit-taking institutions assess and write new home loans. It is a register: each setting is recorded as it stood at the end of every quarter from March 2015, with the date it began or ended and the APRA document that set it.

Five settings have applied since December 2014: the serviceability buffer (the margin above the loan rate at which a borrower must show they can repay), a minimum assessment rate, a benchmark for growth in investor lending, a benchmark for the share of new lending on interest-only terms, and a limit on lending at a high debt-to-income ratio.

What it does not measure. It records the rules, not how lenders or borrowers respond to them. One response, the first home buyer share of new lending, is read by First Home Buyer Lending Share (21660). The buffer level on its own is also a standardised input to Prudential Policy Settings (24722), and the loan-size headline series is an input to the APN Credit Rationing Index™ (24230), within the APN Risk & Compliance Index™ (24200).

The node’s headline is how much APRA’s assessment rules reduce the largest loan a borrower can be approved for, at the average interest rate actually charged on new owner-occupier variable loans.

At a loan rate of 6.25%, a borrower must show they can meet repayments at 9.25%. That reduces the largest loan they can be approved for by 25.2% compared with an assessment at the loan rate itself. The 30-year term is a stated convention, as the reference price is in Foreign Investment Policy (21340). The loan rate is the only input that is not an APRA setting.

Every value is a minimum or a ceiling as APRA states it. Until September 2022 the buffer and floor were supervisory expectations: in 2014 APRA described the 2.0-point buffer and the 10% benchmark as “trigger points for more intense supervisory action”, not hard limits. Since 1 September 2022 the buffer has been a requirement of prudential standard APS 220, at 3.0 points unless APRA determines otherwise, within a range of 2.0 to 5.0. APRA has confirmed the 3.0-point setting in each statement since, most recently on 28 May 2026.

The effect moves with interest rates even when the rules do not. A buffer of a fixed number of points is a larger share of a low loan rate than of a high one, so the same 3.0-point buffer reduced the largest loan by 30.5% in March 2022, at a loan rate of 2.46%, and by 25.2% in June 2026, at 6.25%.

Before September 2019 the headline is NIL RETURN: no published figure for the average rate on new loans exists before July 2019, and the indicator rates published earlier are above the rates borrowers paid. The rules of that period are shown instead at reference loan rates, which is also where the minimum assessment rate matters:

At a loan rate of 4%, the 2014 rules reduced the largest loan by as much as today’s, because the 7% minimum assessment rate bound; at 6%, today’s rules reduce it by 25.5% against 18.3%.

Every setting in the register is a step: it holds a value until APRA changes it. A score standardised against 2015–2025 would measure when a setting began, not conditions. The interest-only benchmark, in force for 8 of those 44 quarters, would read the same high score in every one of them, and the debt-to-income limit, which began after that window, would have no score at all. The node therefore publishes the register and the loan-size headline, and no standardised score or position, by design.

• A change of measure, September 2026. Before September 2026 this node published a standardised score of APRA’s buffer, dated from 2011. It now records the rules themselves, from APRA’s December 2014 letter, and publishes no standardised score.
• Two benchmarks ended lender by lender. The investor benchmark was lifted from 1 July 2018 only for lenders whose boards had given APRA the required assurance, and the interest-only benchmark from 1 January 2019 only for those same lenders. APRA did not publish the dates for the rest; the register records the system-wide change.
• The debt-to-income limit began part-way through a quarter, on 1 February 2026, and is measured each quarter for the largest banks and over a rolling four quarters for others. New construction, newly built dwellings and short-term bridging finance are exempt.
• The headline uses an average rate. Borrowers with lower or higher rates face a smaller or larger reduction; lenders may also apply their own floors and buffers above APRA’s minimum.
• Qualitative measures are not in the register: APRA’s 2017 expectation of internal limits on interest-only lending above 80% loan-to-value, its 2018 expectation of internal limits on high debt-to-income lending, and capital measures such as mortgage risk weights, because APRA set no number for them in these instruments.

The other seven components of Legislation & Policy Analysis (21300).