From www.moneymag.com.au: The Coalition plans to reduce the APRA serviceability buffer from 3% to 2.5% to improve access to home loans for Australians, particularly first-home buyers.

The buffer functions as a stress test, showing the impact of higher interest rates on a borrower’s ability to repay. As such, it can significantly reduce borrowing capacity.

This proposal, supported by the mortgage industry, faces opposition from some banks and groups concerned about potential increases in default rates and housing affordability issues.