A global credit rating agency says Australia's banking watchdog's decision to tighten lending rules for new home loans is a positive move for the longer-term risk profile of the banking industry.
But Fitch Ratings says the revised rules are unlikely to result in immediate changes to the banks' credit ratings.
The Australian Prudential Regulation Authority has told the banks it wants them to assess new borrowers' ability to meet their loan repayments at an interest rate at least three percentage points above the loan product rate they are applying for.
This compares with the serviceability buffer of 2.5 percentage points that has been commonly used.
"The announced measures, as with similar measures previously, are to prevent further risks from building and having a significant systemic impact in a severe downturn," Fitch said in a statement on Thursday.
Treasurer Josh Frydenberg believes the decision is "prudent and targeted", coming at a time of low interest rates and following a dramatic rise in house prices.
APRA's decision came against the backdrop of the fastest rise in house prices in more than 30 years and strong demand for mortgages with interest rates at historic lows.
Shadow treasurer Jim Chalmers said housing affordability is a major issue for Australians.
"Labor supports the regulators doing what they can to ensure the flow of finance for housing is more sustainable and appropriate," he told AAP.
New CoreLogic figures show the value of Australia's residential real estate market has now surpassed $9 trillion, just five months after reaching $8 trillion.
CoreLogic head of research Eliza Owen agreed affordability is an increasing challenge for many segments of the market, but particularly first home buyers who have not had the benefit of home ownership as a source of wealth generation.
"The announcement this week by APRA of further tightening of serviceability buffers is a subtle approach to financial stability and far less likely to move the housing market into negative territory," Ms Owen said.
St George chief economist Besa Deda described it as a "light touch" to temper housing risks.
"We expect the pace of growth in house prices to slow further but we are unlikely to see price falls materialise in the near term from (these) measures alone," she said.
However, Housing Industry Group chief economist Tim Reardon questioned the decision, saying Australia has a strong financial sector.
"It has withstood significant shocks, such as the Global Financial Crisis and the COVID recession, without the emergence of financial contagion," he said.
"Restricting access to credit for new households seeking to enter the housing market will put further downward pressure on the rate of home ownership in Australia."
Property Council of Australia chief executive Ken Morrison said while he understood the rationale for APRA's move, its impacts should be monitored into the new year before any further action is considered.
"It will be vital for the government and the regulator to monitor the situation closely into 2022, to ensure their efforts do not sap broader market confidence during our economic recovery," Mr Morrison said.