Despite a crackdown on lending to landlords, a report from Macquarie analysts shows that Australian banks still allow property investors to borrow a significantly higher multiple of their income than owner-occupiers, which could eventually lead to further tightening of lending standards in the mortgage market.

Banks are offering discounts of up to 1.4 percentage points off standard variable mortgage rates, and it is likely that this trend could squeeze their profit margins.

“While the changes implemented by banks appear to be prudent, we expect further tightening in lending standards over time,” the report said. “This would likely result in further pressure on housing prices and credit availability, which would ultimately result in ongoing pressure on housing volume growth.”

In 2015, banks introduced tougher lending rules to property investors due to pressure from regulators. They demanded bigger deposits and charged customers higher interest rates on loans. The changes reduced the borrowing capacity of all borrowers, especially investors.

But in spite of this, the report still found out that there is a significant gap in how much credit an investor can get compared with an owner-occupier in a similar financial position. The most aggressive lenders are even willing to write loans that were 9.4 times a housing investor’s income. This gap could be difficult to justify for banks.

Aside from tighter regulations, there is also a possibility for future interest rate hikes as banks continue to offer larger discounts to new customers, hence squeezing returns.