As new mortgage rules kick in, will home prices drop?

By Maria Gil · · 2 min read
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suburb near the water going to be affected by new apra rules

The Australian Prudential Regulation Authority (APRA) has announced that future property buyers will have to prove that they can repay their mortgage if rates rise by 3%.

Typically when you apply for a home loan, your lender stress tests your ability to meet loan repayments (also known as home loan serviceability) at a higher rate. This is to make sure that you don’t default on your loan if interest rates go up. 

The new APRA rule increased the standard stress test by 50 basis points, and lenders are expected to increase their own tests by the same number of points. 

The rule will reduce how much you can borrow by about 5%, which means if you have an annual income of $150,000, your borrowing power falls by about $46,000. 

If you have already lodged a home loan application or applied for pre-approval, you won't have to worry about the stress test increase. Many big banks have said they will honour the original stress tests for those who applied before Monday 1 November. 

While this may seem like a slap in the face to potential first home buyers who are struggling to enter the property market, APRA’s new rule aims to reduce the number of people struggling with repayments, especially if the Reserve Bank of Australia increases interest rates. 

"[The move by APRA does make things harder for certain borrowers] but it also flows through to property prices. Fewer people can afford the ridiculous prices that are around now, so unless wages start to catch up, property prices have to slow down. So that’s what they’re trying to do by putting those kinds of higher hurdles in place," said Mozo banking expert Peter Marshall. 

It may sound a bit grim if you are trying to enter the market but with the potential of prices decreasing, it could be worth the wait. 

If you are looking to buy new property soon, check out Mozo’s home loan comparison table to find the right loan for. And if you want to learn more about how to enter the property market check out our home loan guides.

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Last updated 5 December 2025 Important disclosures and comparison rate warning*
What are your home loan needs?
Loan purpose
Buying or Refinancing
  • Promoted

    Unloan Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    Interest rate
    5.19 % p.a.
    Variable
    Comparison rate
    5.10 % p.a.
    Initial monthly repayment
    $2,742
    Go to site
    • The first home loan with an automatic loyalty discount (conditions apply)
    • No application or banking fees
    • Built by CommBank

  • First Home Buyer Loan

    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    • For first home buyers
    • Offset available
    • Redraw available
    Interest rate
    4.99 % p.a.
    Variable
    Comparison rate
    5.04 % p.a.
    Initial monthly repayment
    $2,681
    Go to site
    • Competitive interest rate – 4.99% p.a. (comparison rate* 5.04% p.a.)
    • Offset account to reduce interest and save on repayments
    • No establishment or monthly fees, plus valuation fees waived up to $1,000 (limited time)

  • Fixed Rate Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    Interest rate
    5.09 % p.a.
    Fixed 2 years
    Comparison rate
    5.43 % p.a.
    Initial monthly repayment
    $2,712
    Go to site
    • No ongoing annual fees
    • Make up to $25,000 extra repayments during a fixed period, fee free (T&Cs apply)
    • Lock in for up to 5 years.

  • Unloan Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    Interest rate
    5.19 % p.a.
    Variable
    Comparison rate
    5.10 % p.a.
    Initial monthly repayment
    $2,742
    Go to site
    • The first home loan with an automatic loyalty discount (conditions apply)
    • No application or banking fees
    • Built by CommBank

  • Discount Great Rate Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    • Cashback
    Interest rate
    5.19 % p.a.
    Variable
    Comparison rate
    5.20 % p.a.
    Initial monthly repayment
    $2,742
    Go to site
    • Get up to $3,000 cashback when you apply online (T&Cs apply)
    • No paperwork or payslips required (see site for details)
    • Low variable rate

  • Variable Home Loan 90

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.29 % p.a.
    Variable
    Comparison rate
    5.33 % p.a.
    Initial monthly repayment
    $2,773
    Go to site
    • No monthly or ongoing fees
    • Option to add an offset for 0.10% p.a.

  • Offset Home Loan

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.39 % p.a.
    Variable
    Comparison rate
    5.42 % p.a.
    Initial monthly repayment
    $2,805
    Go to site
    • No ongoing monthly loan maintenance fees to pay.
    • Pre-approval valid for 3 months
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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