On 27 November 2025, the Australian Prudential Regulation Authority (APRA) announced that it was limiting high debt-to-income (DTI) home lending.

APRA is taking this action to pre-emptively contain a build-up of housing-related vulnerabilities in the financial system. While overall bank lending standards remain sound, APRA has noticed a pick-up in some riskier forms of lending over recent months as interest rates have fallen, housing credit growth has picked up to above its longer-term average and housing prices have risen further.

Measures

The DTI limit that APRA is introducing is effective from February 2026 and allows up to 20 per cent of authorised deposit-taking institutions’ (ADIs) new mortgage lending to be at a DTI greater or equal to six times income or more. The limit will apply to ADIs’ owner-occupier and investor portfolios separately and will be measured on a quarterly basis. Within the limit, banks retain discretion to lend to creditworthy high DTI borrowers, in line with their own risk appetite and lending policies.

APRA is providing ADIs with certain exemptions from the DTI limit for bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings. There is also a measure of proportionality for non-significant financial institutions so that they can apply the limit in a way that smooths through periods of volatility.

Next steps

APRA will be actively monitoring and engaging with lenders to ensure the DTI limit is working as intended and, if appropriate, adjust settings.