The lending environment after Covid isn’t just about rates; it’s also about rules.
In mid-2024 the Reserve Bank introduced debt-to-income (DTI) restrictions, limiting the share of new lending that can go to borrowers with very high income multiples. At the same time it eased loan-to-value (LVR) rules slightly, giving banks more room to lend to low-deposit owner-occupiers.
Now, with prices well below their 2021 peak, the central bank is preparing to loosen LVRs further from December 2025 so banks can write a larger share of loans to borrowers with less than 20% deposit. DTIs will stay in place to keep overall risk in check.
From the broker’s side of the table, what does this mean for you?
- Your income story is front and centre. Banks are looking harder at stability and diversity of income, not just simple multiples.
- Living costs really matter. Post-Covid, lenders have sharpened their expense models. High BNPL or consumer-debt usage can hurt serviceability.
- Low-deposit doesn’t mean low-standard. Even if LVR rules are easing, the quality of your application – clean statements, clear savings pattern, realistic property choice – is still crucial.
Our role is to translate this alphabet soup (LVR, DTI, HEM, CCCFA) into plain English, and to shape your application so it fits within each bank’s credit box rather than fighting against it.
