Glossary · Australian property
APRA serviceability buffer.
The rate-stress test APRA requires lenders to apply when assessing home-loan capacity. As of 2026 it's the loan rate plus 3 percentage points.
APRA (Australian Prudential Regulation Authority) requires all mortgage lenders to test borrowers' serviceability at a rate higher than the actual contracted rate, protecting against rate rises during the loan term. Current buffer: actual rate + 3.0 percentage points.
A 6.5% loan is tested at 9.5%. The borrower must demonstrate cashflow capacity to service the loan at that higher rate. APRA reviews the buffer annually. Expect 3.0% to persist while rate volatility is elevated.
Genuine refinances (LVR ≤80%, no equity-pull, same loan size or smaller) can use a tighter buffer (down to +1% in some cases) under APRA's prudential carve-out. This opens up better-rate refinances for existing borrowers.
Source
APRA APG 223 (Residential Mortgage Lending); APRA prudential update October 2021.
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