New mortgage rules…what do they mean

The Reserve Bank just shook things up with a surprise move: from December 1, they’re loosening LVR rules. That means more low-deposit loans for home buyers and investors. Owner-occupiers can now get up to 25% of lending with less than a 20% deposit, up from 20%. Investors get a boost too – 10% of their lending can now have less than a 30% deposit, up from 5%.

Sounds like good news, right? But don’t expect a property frenzy. First-home buyers are already active, and loosening the LVR caps won’t change much for them. Only about 12-13% of owner-occupier loans currently use less than a 20% deposit, so the new limits aren’t a game changer.

For investors, low-deposit loans have been tight. The easing helps, but other controls – like debt-to-income limits and bank serviceability checks – still hold things back. The result? No massive surge in investor borrowing coming.

Meanwhile, rents are softening in many centers. Higher rental supply and tough affordability are weighing on tenants. Add to that a sharp drop in net migration: just 10,600 in the past year versus a long-term average of 31,500 and rental demand isn’t about to boom anytime soon.

On the build front, construction costs are steady, with just a 0.4% rise over the last three months. The industry’s been in slowdown mode for years, keeping labour and materials costs in check. Builders should see better days in 2026, with interest rates down and lending rules encouraging new builds. But don’t expect a repeat of the post-COVID price spike.

Inflation looks set to hit around 3% soon, the Reserve Bank’s top target. It’s a tricky spot, especially with rate cuts underway, but this inflation lift should be short-lived.

We’re also watching mortgage refinancing closely. More borrowers are switching banks to snag cashback deals and better rates. September’s lending data will tell us if that trend is still going strong.

Bottom line? The door to borrowing with lower deposits is opening wider, but it’s no free-for-all. Lending rules and market conditions mean smart planning is essential.

If you’re thinking about buying, investing, or refinancing, now’s the time to talk. We’ll help you navigate the changes and make the best move for your situation.