Lenders are continuing to offer cut-price interest rates and financial incentives to home buyers despite moves by the financial regulator to rein in borrowing. The Commonwealth Bank and ING both cut their variable interest rates last week for new customers with larger deposits and, according to comparison website RateCity, 28 lenders have cut at least one of their variable rates in the past month.

Analysts are predicting the continued competition from banks will reduce the impact of the APRA move to require banks to more cautiously assess home loan customers.

Banks must now assess new borrowers at an interest rate 3 percentage points higher than the actual rate of their loan (it was previously 2.5 points). Macquarie analyst Victor German says APRA may need to introduce further measures to counter the banks continued reductions in interest rates.