Borrowing Power Drops

Affordability will factor even higher in the decision making process for buyers in the current market, as borrowing power continues to drop, despite falling property prices.

Analysis by Lendi and Aussie Home Loans shows that five interest rate rises since the start of the year have reduced a typical Australian home buyer’s budget by $100,000.

Lendi executive of mortgage brokerage Sebastian Watkins says buyers’ budgets are shrinking.

Property prices across the combined capital cities have fallen by 8.1% since the March 2026 peak.

A couple earning the median wage with a 20% deposit have had their borrowing power reduced by 10.6% since January.

A single buyer with the same income has had their borrowing capacity dropped by $53,236 over the same period.

Borrowing capacity has dropped because the Australian Prudential Regulation Authority (APRA), requires that borrowers can service a loan with a 3% buffer.

Following interest rates rises those taking out a new loan need to prove they can potentially pay it back with a rate of almost 10%.