The banking regulator, Australian Prudential Regulation Authority (APRA), is moving to tighten lending standards, increasing the minimum interest rate buffer from 2.4 % to 3%.  This will occur at the end of October this year.

This has come about since the Reserve Bank of Australia released data showing housing debt-to-income ratios reached a high of 102% for owner occupiers and yearly housing credit growth of 5.6% which was beyond the income growth of 1.6%.

In the short term, Red23 believes it will have little effect on the demand for housing, as demand for housing particularly in the greenfield areas remains strong.

It is a welcomed response to reduce rapid property price increases, however, it will have a negative effect on first home buyers who are already on the backfoot because of recent rapid price increases.