Analysts say the prudential regulator is likely to reduce so-called serviceability buffers to allow borrowers to get bigger loans as it prepares to release what will be a closely watched review of its housing market lending rules within the next fortnight.

Changing the interest rates used in loan serviceability tests could increase borrowing capacity in a higher interest rate environment. The Australian Prudential Regulation Authority has already declared it was open to adjust settings to avoid strangling credit growth in the housing market.