Currently APRA requires banks to consider the capacity of a borrower to pay back their loan if interest rates rise by 3 per cent.

Financial comparison site Canstar has calculated that someone on an average full-time salary of $103,024 per year could borrow $40,000 more if the buffer was reduced to 2 per cent (instead of the current 3 per cent), on a 30-year-loan with a 6 per cent interest rate.

“We don’t think they should be paying higher interest rates,” Sukkar said.

Are there any downsides to changing the serviceability buffer?

Potential changes to LMI would also enable buyers to borrow more money.

“APRA should factor in first-time buyers when shaping regulations with an eye to boosting homeownership, maintaining balance and flexibility to adapt to changing conditions.”

‘Hard to work out’, Albanese says

Commenting on the Coalition’s plan, Prime Minister Anthony Albanese said it was “hard” to work out exactly what it was promising first home buyers, while highlighting his own policy for young house seekers.