A 3% buffer means if you're applying for a home loan at 6% p.a., you need to demonstrate to your lender your income and other expenses could accommodate paying the loan off if the rate was 9% p.a.

The buffer has been 3% since October 2021 when it was increased from 2.5%, but this has been heavily criticised for being too restrictive.

In the lead up to the election the Coalition pledged to put pressure on APRA to reduce the buffer, Shadow Housing Minister Michael Sukkar claiming it was preventing "tens of thousands of Australians from getting a home loan even when they can meet the repayments."

However, APRA Chair John Lonsdale has once again ruled the buffer will for now remain unchanged.

"High household debt is a key vulnerability in our financial system, which has more exposure to residential mortgages than any comparable country," he said.

Mr Lonsdale challenged the idea that the current buffer was locking too many Aussies out of buying property.

"Over recent months, we have seen credit continuing to flow to different borrowing segments, including to first home buyers," he said.

Read more: What is the serviceability buffer?

More restrictions coming?

With interest rates widely expected to fall further in the coming months, many are expecting a surge in property buying as borrowing power improves.

Some economists have suggested the Non-Accelerating Inflation Rate of Unemployment (NAIRU) might now be around current levels and the RBA may be happy to cut rates even if unemployment doesn't increase - which could further increase housing credit demand.

Mr Lonsdale said APRA and the Council of Financial Regulators are "carefully monitoring" this situation and will prepare for "potential risks".

"In 2022, APRA updated its prudential standard on credit risk to requires banks to be pre-positioned to implement a range of credit based macroprudential measures, if needed, to address risks to financial stability," he explained.

That probably doesn't mean the serviceability buffer will be increased any time soon, but it does suggest APRA is leaving the door open to introducing other lending restrictions if there's another surge in borrowing.

One possibility is a fresh limit on high debt to income loans - the ratio of a borrowers total outstanding debts against their annual income.

APRA currently deems any loan that would mean a borrowers debts are equal to or greater than their annual income a high DTI loan, but does not currently enforce specific limitations.

Most major lenders already have in-house debt-to-income rules - Westpac for example sends all loans with a DTI above seven to its credit department for manual assessment.

Another potential "macroprudential measure" is limits on new investment or interest only loans.

This would likely be similar to measures introduced in 2017, which limited new interest only lending to 30% of total new mortgage lending, while expecting banks to maintain investment lending did not increase by more than 10% each year.

Investors and real estate professionals would likely be outraged by the reintroduction of such a measure, but for those looking to buy there could be a silver lining - Australia's median property price dropped sharply in 2018 before APRA lifted those restrictions.

However access to credit at that point could be more important than the home's value.

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