Mortgage loan growth moderates as APAC policies tighten

Eligible cover assets rose in Australia, New Zealand, Singapore, and Korea.

Mortgage loan growth momentum for APAC covered bond issuers is expected to moderate in 2026 on the back of interest rate cuts and tighter policy in some markets, according to Fitch Ratings.

Policies are mixed across Australia, New Zealand, Singapore, and South Korea, with some having less stringent lending rules for first-time home buyers, to heavier tax measures aimed at curbing speculation, the ratings agency noted in a 12 March 2026 non-rating commentary.

Rate cycles and evolving policies are expected to only limitedly affect flow of new mortgages.

“We expect the rate cycles and evolving prudential measures to have a limited impact on eligible cover asset volumes for APAC programmes in terms of ongoing asset replenishment or supporting programme stability across rate cycle transitions by retaining overcollateralisation,” Fitch wrote.

Eligible cover assets— or mortgages that meet certain criteria to be included in a cover pool— in APAC rose in 2025, Fitch said. This increased the stock of unencumbered assets available to support outstanding covered bonds and potential new issuance, largely driven by improved mortgage affordability amidst falling rates.

Annual asset growth was 5.7% in Australia and New Zealand, around 4% in Singapore, and 5.9% in Korea, based on actual mortgage data.