APRA chair John Lonsdale at the 2025 ASIC annual forum. Picture: Supplied
Property investors are facing a fresh threat to their borrowing power, with a looming crackdown on lending rules tipped to worsen the nation’s already critical housing shortage.
Australia’s financial regulator this week flagged a fresh round of restrictions, on the back of September figures from the Reserve Bank showing investor loans jumped 0.77 per cent — the strongest monthly rise in more than eight years.
“Housing remains a key vulnerability, given high household debt and prices continuing to rise,” Australian Prudential Regulation Authority (APRA) chair John Lonsdale said, highlighting insights from the body’s System Risk Outlook released Thursday.
“We are carefully monitoring these risks and ensuring banks are prepared to implement additional macroprudential tools where required to reinforce lending standards.”
Surfers Paradise units are typically priced under $1m, drawing interest from first-home buyers as well as investors
Despite overall housing lending standards remaining sound, APRA’s report found signs of a pick-up in “higher risk lending, particularly high debt-to-income borrowing by investors”.
Industry expert James Fitzgerald said it’s a signal that should spur investors to action.
“If APRA tightens policy again, borrowing power can evaporate overnight,” Mr Fitzgerald said.
“Today’s approval could be tomorrow’s rejection, not because your financial position changed, but because the rules did.”
The managing director of Gold Coast-based Custodian and author of Bulletproof Investing: Gaining Financial Control in Uncertain Times said the biggest hurdle for investors wasn’t finding the right property, but rather, getting finance approved.
APRA was the “hidden hand behind your loan approval”, setting rules that determine who banks can lend to, based on markers including the Household Expenditure Measure (HEM) and a serviceability buffer, currently testing if buyers could still pay their loan if rates rose by 3 percentage points.
Custodian managing director James Fitzgerald.
Highlighting the potential impact of a move by APRA, Mr Fitzerald pointed to 2017, when the regulator said investor loan books could grow by no more than 10 per cent a year.
In response, banks tightened interest-only lending, loan-to-value ratios shrank, buffers increased, and HEM assumptions were upped, leading to a swift decline in borrowing power.
“It’s a paradox only the Australian housing market could deliver: we’re in a nationwide housing shortage, investors are responsible for building roughly half of all new dwellings, and the regulator’s likely response is to make it harder for investors to borrow,” Mr Fitzgerald said.
A townhouse in Oxenford is expected to attract investors when it goes under the hammer
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Investors in Queensland were currently competing with first-home buyers for entry-level priced properties, sparking a surge in activity, according to the latest market update from Property Investment Professionals of Australia (PIPA).
“Many buyers who had been sitting on the sidelines are now stepping into the market with more confidence,” buyers agent Melinda Granzien said.
“While this is positive for first-time buyers, the flow-on effect is tighter competition and additional upward pressure on prices in already competitive markets.
“With demand showing no signs of easing, buyers who act decisively and are well-prepared will be best placed to succeed in this fast-moving market.”
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