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Speaking on the latest episode of Broker Daily Uncut, brokers Eva Loisance and Costa Arvanitopoulos discussed several recent policy changes across lenders that suggest they are attempting to restore servicing capacity.
The changes come amid both a tightening of regulation around serviceability and the renewed spectre of a rate hike cycle.
For instance, from 1 February 2026, the Australian Prudential Regulation Authority (APRA) introduced limits on high DTI home lending, restricting authorised deposit-taking institutions from issuing more than 20 per cent of new mortgages to borrowers with debt of six times their income or more.
The rule was announced in November 2025 amid concerns about rising investor activity and growing household indebtedness.
In July last year, APRA also kept its mortgage serviceability buffer at 3 per cent.
Loisance said: “I think with all the regulation that came in with APRA and DTI and all that, banks are trying to find ways to actually give back some servicing to borrowers.”
Rental income changes boost borrowing capacity
One recent change that brokers outlined was by National Australia Bank (NAB), which has reduced shading of rental income from 20 per cent plus expenses to 10 per cent plus expenses.
Loisance said the reduced amount of rental income excluded from serviceability calculations will help boost borrowing capacity.
She explained: “So let’s say you’re earning $1,000 a week for rent. They used to shave off 20 per cent of that, so they would only use 800 servicing. They are now only doing 10 per cent. So instead of using 800, they will use 900 as income in your service.
“It’s quite a big change. It means your servicing will increase and you can potentially buy a higher price property, which will again help the market.”
Lenders take more flexible approach to income
Alongside rental income adjustments, lenders are also revisiting how they treat employment income in loan assessments.
In particular, some lenders are expanding how they assess casual income, which has historically been treated more conservatively due to irregular work patterns.
“We’ve also seen recently quite a few lenders opening up options for casual income,” Loisance said.
She noted that lenders are beginning to recognise that some borrowers with casual work histories may still have stable income over time.
“The casual person might be a mother that can’t work traditional full-time hours. They’re still very committed to that job, but that makes that family not able to buy property. But actually, you know, she’s been doing it for five years, she’s doing it constantly. Maybe they should look at that as more of a reliable source of income,” Loisance said.
Specifically, Loisance and Arvanitopoulos noted that Westpac had updated its rules around casual employment.
ANZ steps into the 5% Deposit Scheme
Another recent development is that Australia and New Zealand Banking Group (ANZ) has become the last major bank to join the lender panel of the Australian government’s 5 per cent Deposit Scheme.
Launched in its current form in October 2025, the scheme enables eligible first home buyers to purchase a home with a deposit as low as 5 per cent and single parents or legal guardians with a deposit as low as 2 per cent, without the need to pay lenders mortgage insurance (LMI).
The deposit scheme was previously available through a panel of three major bank lenders (excluding ANZ) and 37 non-major lenders.
ANZ has told brokers it is currently working through the system updates, policy, and process changes to be able to offer the guarantee scheme loans to borrowers, with further details on an official launch date expected shortly.
Loisance noted that additional banks joining the government’s deposit scheme could increase competition and speed up approval processes for eligible borrowers.
“For a while, we had only a few banks doing it,” she said.
“Which meant people would apply and sometimes have to wait quite a while before they were pre-approved and could go and buy property.
“That’s often a problem because people tend to be very excited once they’ve seen a property, want the property and only come to you then, so there’s always a bit of a stressful moment there where I’m happy to lodge it right now, but the bank won’t look at it for quite some time.”
Broker Daily has recently reported on how first home buyers were a key driver of late-2025 momentum in mortgage activity following the expansion of the federal government’s 5 per cent Deposit Scheme.
Surging demand has also pushed prices up at the lower end of the market and increased turnaround times.
Loisance added that expanding the lender panel could reduce turnaround times and potentially improve rates.
“It adds a bit of competition there, obviously if there’s more banks doing it, the rates might become more competitive,” Loisance said.
[Related: Non-banks see surge in commercial lending demand as banks retreat]