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APRA Sets New Limits on High Debt-to-Income Home Loans

What the New APRA Regulations Mean for Borrowers and Lenders

APRA Sets New Limits on High Debt-to-Income Home Loans?w=400

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Prudential Regulation Authority (APRA) has unveiled a new policy aimed at curbing high-risk lending practices within the housing market.
Effective from 1 February 2026, banks will be restricted to issuing no more than 20% of new home loans to borrowers whose debt-to-income (DTI) ratio exceeds six times their annual income.
This measure applies to both owner-occupied and investor loans, excluding new housing developments.

This proactive approach by APRA is designed to mitigate potential financial stability risks associated with high household debt levels. By implementing this cap, APRA aims to prevent the growth of highly leveraged mortgages that could pose systemic risks to the economy.

For prospective borrowers, this means that obtaining a high DTI loan may become more challenging. Lenders will need to adjust their lending practices to comply with the new cap, potentially leading to stricter eligibility criteria for high DTI loans. Borrowers should assess their financial positions and consider how these changes might affect their ability to secure financing.

In conclusion, APRA's introduction of a cap on high DTI home loans reflects a commitment to maintaining financial stability in Australia's housing market. Both lenders and borrowers should prepare for these changes and consider their implications on future lending and borrowing activities.

Published:Tuesday, 20th Jan 2026
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

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Knowledgebase
Debt-to-Equity Ratio:
A measure of a company’s financial leverage, calculated by dividing its total liabilities by stockholders’ equity.