The APRA serviceability buffer

What the buffer is

APRA's media release of 6 October 2021 says banks (authorised deposit-taking institutions) should assess whether a new borrower can meet repayments at a rate at least 3.0 percentage points above the loan product rate. The same release says 2.5 points was commonly used by banks at the time, and that the increase applies to all new borrowers. APRA gave "growing financial stability risks from ADIs' residential mortgage lending" as the reason.

It is a margin for safety. APRA's 28 May 2026 release says the buffer helps ensure that recent new borrowers can continue to service their loans despite higher costs and interest rates.

The current setting

On 28 May 2026 APRA said the mortgage serviceability buffer "will remain at 3 percentage points", so the setting was unchanged. That is the latest APRA statement I found on 2 November 2026. APRA can change the setting, so check APRA's website for the current position.

This matches the note in how to refinance a home loan.

How it affects borrowing

The buffer does not change your repayments. It changes how much a bank will lend, because your income must cover the loan at the higher test rate.

Worked example, RateSonar's arithmetic on advertised rates, not any lender's assessment. As at 2 Nov 2026 the median advertised standard owner-occupier variable rate in the data is 6.74%. For a $600,000 loan over 30 years:

The higher figure, $5,151 a month, is the sort of repayment your income has to support in the test. A lender may use a higher assessment rate of its own. Your actual repayment is based on the rate you are charged, which is why a lower rate also helps you pass the test. See live rates and compare rates.

Exceptions and refinancing

APRA's 4 December 2023 update says banks can apply exceptions to the serviceability buffer when appropriate, including for borrowers who are seeking to refinance, as long as the number of exceptions remains within an ADI's risk appetite. That does not oblige any lender to make an exception. Ask whether your lender will, and how it treats your existing loan. See the real cost of switching.

How it relates to rate moves

The buffer is separate from the RBA cash rate, which was 4.60% as at 29 Oct 2026. The cash rate affects the rates lenders charge. The buffer affects the test. See why home loan rates move and the rate outlook.

Questions to ask your lender

• What assessment rate do you use for my loan?
• Do you apply any exceptions if I am refinancing?
• Which part of my application limits what I can borrow: income, expenses, debts or the buffer?
• How do you treat my credit card limits?

Also see how lenders assess serviceability and the HEM benchmark.