Imagine you've finally found the perfect one-bedroom unit in Sydney's inner west. The location is ideal, the building is well-maintained, and the asking price fits your budget. But when you ask about the quarterly strata fees, the agent casually mentions they've gone up by 40% this year—mainly due to a jump in the building's insurance premium. Suddenly, that affordable mortgage starts looking a lot tighter.
This scenario is becoming increasingly common across Australia. In July 2026, the Australian Financial Review reported that insurance broker practices in the apartment sector have been referred to the Australian Competition and Consumer Commission (ACCC) for investigation. The core issue? Rising strata insurance costs that are squeezing unit owners and making apartment loans less affordable.
For anyone comparing home loans for a unit, this isn't just a news headline—it's a real financial factor that lenders are starting to weigh more heavily. In this article, we'll break down what's happening, how it affects your borrowing power, and most importantly, how you can compare loans wisely when strata costs are unpredictable.
What the ACCC Investigation Means for Apartment Buyers
The referral to the ACCC stems from concerns that some insurance brokers in the apartment sector may be engaging in practices that inflate premiums—potentially through lack of competition or opaque fee structures. While the investigation is ongoing, the immediate effect is clear: strata insurance costs for many apartment buildings are rising faster than general inflation.
According to data from Strata Community Australia, the average strata insurance premium for residential apartment buildings increased by roughly 25% between 2024 and 2025, with some high-risk buildings seeing jumps of 50% or more. For a typical unit owner, that could mean an extra $800 to $1,500 per year in levies.
Why does this matter for your mortgage? Because lenders assess your ability to repay based on your total housing costs—not just the loan repayment. When strata fees eat up more of your income, your borrowing capacity shrinks. A loan that looked affordable at a 4% comparison rate might become a stretch if strata costs rise by $100 a month.
The ACCC's involvement signals that regulators are taking this seriously. But for now, buyers need to be proactive. When comparing apartment loans, don't just look at the interest rate and fees—factor in realistic strata cost projections. Our guide to comparing home loans can help you build a complete picture.
How Rising Strata Costs Change the Loan Comparison Equation
Most home loan comparison tools focus on the obvious numbers: interest rate, annual percentage rate, establishment fees, and monthly repayments. But for unit buyers, there's a hidden variable that can make or break affordability.
Let's consider a concrete example. You're looking at a $500,000 loan for a two-bedroom apartment in Melbourne. Two lenders offer similar products:
- Lender A: 5.80% variable rate, $0 annual fee, but requires a 20% deposit. Monthly repayment: $2,934.
- Lender B: 5.95% variable rate, $395 annual fee, but accepts a 15% deposit. Monthly repayment: $3,017.
On the surface, Lender A looks cheaper by $83 per month. But when you factor in strata costs—say, $5,000 per year currently, with a potential rise to $6,500 next year due to insurance hikes—the picture changes. The $1,500 increase in strata fees adds $125 per month to your housing costs. Suddenly, Lender A's advantage is wiped out, and Lender B's lower deposit requirement might actually make it more accessible.
This is where a detailed comparison becomes essential. You need to stress-test your budget. Ask yourself: Can I still afford this loan if strata costs rise by 30% over two years? If not, you might need to consider a smaller loan, a different property type, or a lender that offers more flexible terms.
For a deeper look at how to evaluate these trade-offs, check out our apartment loan comparison page. We break down not just rates, but also how lenders treat strata fees in their borrowing calculations.
Three Practical Steps to Protect Your Mortgage from Strata Shocks
You can't control insurance premiums or broker practices, but you can take steps to ensure your apartment loan remains manageable even if costs rise. Here are three strategies that go beyond basic rate shopping.
1. Request a Strata Insurance History Report
Before making an offer, ask the vendor or strata committee for the building's insurance history for the past three to five years. Look for year-on-year premium increases. If you see jumps of 20% or more, factor that into your budget. Some lenders may also request this information during pre-approval, so having it ready speeds up the process.
2. Choose a Loan with a Redraw Facility or Offset Account
A redraw or offset account gives you a buffer. If strata costs rise unexpectedly, you can draw on extra repayments to cover the difference without going into arrears. Not all loans offer this feature, and those that do may charge higher fees. But for unit buyers in volatile strata markets, it's worth paying a little more for flexibility. Our offset account guide explains the differences and how to compare options.
3. Stress-Test Your Loan with a Higher Buffer
Most lenders apply a serviceability buffer of 3% above the current interest rate (so at 5.80%, they test at 8.80%). But this buffer doesn't account for strata cost inflation. Create your own stress test: add 1% to your loan rate and also add $200 per month to your estimated housing costs. If the resulting repayment still fits comfortably in your budget, you're in a safer position.
FAQ: Strata Insurance and Apartment Mortgages
How do strata insurance costs affect my borrowing capacity?
Lenders calculate your debt-to-income ratio using all housing expenses, including strata levies. If strata costs are high or rising, your borrowing capacity decreases. Some lenders may even decline loans for buildings with unusually high insurance premiums, especially if the building has a history of claims.
Can I switch lenders if my strata costs rise after I buy?
Yes, but it's harder. If your strata costs increase significantly, your debt-to-income ratio worsens, which may make refinancing more difficult. That's why it's crucial to choose a loan with low exit fees and flexible terms upfront. Always check the refinancing criteria before committing.
Should I avoid buying an apartment altogether because of insurance issues?
Not necessarily. Many apartments remain affordable and well-insured. The key is due diligence. Look for buildings with strong sinking funds, proactive strata management, and a history of stable insurance premiums. Older buildings with poor maintenance records are more likely to see sharp premium increases.
Sources
- "Insurance brokers in apartment sector reported to watchdog" – Australian Financial Review, 11 July 2026.
- "Strata Insurance Premium Trends 2025–2026" – Strata Community Australia, June 2026.
- "How Strata Fees Impact Mortgage Serviceability" – Canstar, May 2026.
- "APRA's Guidance on Housing Expense Buffers" – Australian Prudential Regulation Authority, 2025.
This article is for educational purposes only and does not constitute financial advice. Always consult a qualified mortgage broker or financial adviser before making loan decisions. ozLoan is an independent comparison platform—compare loans at ozloan.net.