APRA Holds Macroprudential Settings Steady Amid Global Uncertainty — Lending Standards Unchanged

APRA Holds Macroprudential Settings Steady Amid Global Uncertainty

The Australian Prudential Regulation Authority (APRA) confirmed on 28 May 2026 that it will maintain its current macroprudential policy settings following its latest review of domestic and international financial conditions and risks.

APRA cited "a highly uncertain environment" as the backdrop for its decision — referencing global geopolitical risks, elevated inflation in some sectors, and ongoing volatility in international financial markets.

What Are Macroprudential Settings?

Macroprudential policy tools are the regulatory levers that govern systemic risk in mortgage lending across Australia's banking sector. The key tools include:

• Serviceability buffer — currently requires lenders to assess a borrower's ability to repay at their actual loan rate plus 3%. This buffer significantly reduces the maximum amount a borrower can borrow relative to their income.
• High-LVR lending guidance — APRA monitors and limits concentration of high loan-to-value ratio lending across the system
• Investor lending concentration — used in previous cycles to restrict investor mortgage growth at specific institutions

APRA's decision to hold means no new tightening and no loosening of these system-wide settings.

The Current Macro Landscape

APRA's review comes against a backdrop of:

• RBA cash rate at 4.35% — elevated by historical standards, with the full transmission to variable-rate borrowers already working through the system
• CPI at 4.2% annually (April 2026, ABS) — above target, but trending lower
• Global uncertainty — Middle East geopolitical risks affecting energy prices; broader financial market volatility

In this context, APRA's choice to maintain existing settings reflects a "hold and monitor" posture — neither tightening into a slowing economy nor relaxing prematurely while inflation remains above target.

What This Means for Bank Borrowers

For borrowers applying through major banks and credit unions (Authorised Deposit-Taking Institutions, ADIs), the status quo continues:

• Serviceability is assessed at your current interest rate plus 3% — meaning a borrower seeking a loan priced at 6.5% will be assessed at 9.5% repayment capacity
• Owner-occupier and investor lending remain subject to existing LVR and income documentation requirements
• No immediate easing of credit access at the major bank level

Banks will continue applying conservative criteria to irregular income sources, self-employed applicants, and non-standard borrowers — particularly given the serviceability buffer requirement.

Why This Creates a Persistent Non-Bank Advantage

APRA's macroprudential rules apply specifically to ADIs — banks, credit unions, and building societies. Non-bank lenders are not subject to these regulations.

MPFG Capital operates under ASIC's responsible lending framework and holds its own Australian Credit Licence (ACL 553698). This regulatory difference translates into practical advantages for borrowers who fall outside bank criteria:

As long as macroprudential settings remain in place — as they have since APRA introduced them in 2021 — this gap between bank and non-bank access will persist. For borrowers on the "wrong" side of the bank criteria, non-bank lenders are not a fallback; they are the primary path.

APRA's Broader Direction: Three-Tier Banking Framework

Separately, APRA is progressing its three-tiered proportionality framework for banking — applying different regulatory standards to large, mid-sized, and small banks. This structural reform does not directly affect non-bank lenders, but may over time reshape how smaller banks compete in the mortgage market and influence which segments they target.

Practical Takeaway

For borrowers currently unable to get bank approval:

1. The macroprudential hold confirms bank criteria won't loosen anytime soon — don't wait for the rules to change
2. Non-bank lenders offer a compliant, regulated alternative with more flexible income assessment
3. The gap between what banks can do and what non-banks can do is a structural feature, not a temporary condition

MPFG Capital is a specialist non-bank lender with over $700 million in settled loans, serving self-employed borrowers, new migrants, and commercial property buyers who require more flexible lending criteria. Contact us: 03 9696 8888 or finance@mpfg.com.au.

Source: APRA, "APRA maintains current macroprudential policy settings in highly uncertain environment," 28 May 2026.