Almost one in four new mortgages are risky, according to new data released today by APRA.

APRA’s quarterly ADI property exposure report for December 2021 quarter shows 24.4 per cent of new mortgages had a debt-to-income ratio of six times or more, in dollar terms. This is up from 23.8 per cent in the September quarter. A year ago, it was just 17.3 per cent.

Debt-to-income ratios of six and over are considered risky by APRA.

This comes as new ABS data out today shows residential property prices recorded their biggest annual rise on record, up 23.7 per cent in 2021. However, the latest CoreLogic data shows growth in property prices is starting to cool in 2022.

In response to rising debt-to-income levels, APRA has already increased the rate at which banks stress test mortgages from 2.5 per cent to 3 per cent on November 1, 2021.

While APRA’s more stringent serviceability test was in place for part of the December quarter, many customers who had pre-approval but had not yet bought a property by 1 November were still assessed under the old serviceability buffer.

Proportion of new residential mortgages with a debt-to-income ratio of six times or higher

Dec quarter 2021Last quarter (Sept 2021)1 year ago (Dec 2020)
Debt-to-income of 6 times or higher24.4%23.8%17.3%

Source: APRA quarterly authorised deposit-taking institution statistics for December 2021, all ADI’s, released 15 March 2022.

Offset account balances – outstanding loans (owner-occupier and investor)

Dec quarter 2021Change from previous quarterChange from
1 year ago

$231.68 billion

$9.74 billion

$29.60 billion

Source: APRA quarterly authorised deposit-taking institution statistics for December 2021, all ADI’s, released 15 March 2022. research director, Sally Tindall, said: “It’s no surprise risky lending rose at the same time property prices skyrocketed.”

“Almost one in four mortgages settled in the December quarter had risky levels of debt compared to their household incomes, the price many Australians had to pay to get into an overheated property market,” she said.

“APRA has already taken steps to reign in risky lending, by making banks stress test customers on a rate 3 per cent above what they’re currently paying.

“With property prices already starting to cool, and the RBA poised to hike interest rates, APRA is unlikely to implement any further measures.

“In fact, after a series of RBA interest rate hikes, we could see APRA reduce its serviceability buffer back down to 2.5 per cent.

“Most Australians with home loans are in a good position to tackle the forecasted interest rate hikes heads on.

“Mortgage holders have a whopping $231.68 billion in offset accounts, which will offer many a decent buffer when rates rise,” she said.

Income required to buy a median house, without taking on risky levels of debt

Analysis by RateCity shows to buy a median-priced house in Sydney, an estimated household annual income of $188,331 is needed to avoid taking on a risky loan.

In Melbourne, the income needed to have a debt-to-income ratio of less than six is $133,336.

Median house price (Feb 2022)Loan size (assumes 20% deposit)Annual income required to have debt to income less than 6 x
































Source:, CoreLogic. Median house prices are from Core Logic Feb 2022, released 1 March 2022. Debt-to-income ratio of 5.99 is assumed. LMI costs not included.