What did the Australian Prudential Regulation Authority decide in its May 2026 macroprudential policy review?

The Australian Prudential Regulation Authority (APRA) decided to keep all its core macroprudential policy settings steady.

Why is APRA keeping mortgage and lending limits unchanged right now?

APRA is maintaining these strict settings due to heightened global uncertainty and rising domestic cost pressures. The regulator noted a weaker macroeconomic outlook driven by elevated inflation, recent interest rate hikes, and geopolitical tensions in the Middle East pushing up oil prices.

How does APRA’s May 2026 decision affect Australian bank stocks like Commonwealth Bank (ASX:CBA) or Westpac (ASX:WBC)?

The decision keeps credit conditions tight, meaning major Australian banks cannot loosen lending standards to aggressively chase volume. However, because the banking system remains well-capitalised and non-performing loans are currently low, the unchanged settings reinforce the defensive stability of the banking sector.

What are APRA’s current rules for high debt-to-income lending in Australia?

APRA's unchanged policy allows banks to write up to 20 per cent of their new owner-occupied and investment loans to borrowers with a debt-to-income (DTI) ratio greater than or equal to six times.

What does the unchanged 3 per cent mortgage serviceability buffer mean for property buyers?

The 3 percentage point serviceability buffer means banks must continue testing whether new mortgage applicants can afford repayments if interest rates rise 3 per cent above their offered rate. This strict buffer acts as a headwind for retail buyers by limiting maximum borrowing capacity.

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APRA holds lending settings steady amid uncertainty

Written by Heidi Cuthbert Published May. 28 2026Last Updated May. 28 2026

The Australian Prudential Regulation Authority has maintained its current macroprudential policy settings, citing a highly uncertain and volatile economic environment.

The regulator confirmed that the mortgage serviceability buffer will stay at 3 percentage points, the countercyclical capital buffer will remain at 1% of risk-weighted assets, and high debt-to-income lending limits will continue unchanged.

APRA noted that while household and business cashflows face increased pressure from elevated inflation and recent interest rate rises, the banking system remains resilient, and non-performing loans are currently low.

APRA Chair John Lonsdale highlighted a recent shift in the macroeconomic outlook, pointing to geopolitical tensions in the Middle East and rising oil prices as key contributors to domestic cost pressures.

"Consumer sentiment and business confidence have weakened, and downside risks to economic growth are heightened," Lonsdale said, adding that the risk landscape could evolve rapidly depending on global developments.

Despite signs of moderation in house prices, credit growth for investors remained strong in the March quarter, and business credit stayed above its historical average.

APRA emphasised that current lending standards are sound, with high DTI lending tracking well below regulatory limits.