APRA introduces a new cap on high DTI loans from February 2026
The Australian Prudential Regulation Authority (APRA) has announced it will introduce a new cap on high debt-to-income (DTI) home loans from 1 February 2026.
APRA said it has seen an increase in loans where borrowers take on debt equal to six times their income or more, particularly among investors. The new limit, it hopes, will curb this rise in riskier lending as interest rates ease and housing credit growth picks up.
Under the change, banks will be limited to issuing no more than 20% of new lending at a DTI of six or higher. The cap applies separately to owner-occupier and investor loans. APRA said this is designed to prevent household debt from climbing too quickly and to strengthen financial stability, rather than restrict access to credit in the near term.
Many borrowers are unlikely to be affected immediately, but investors who typically borrow at higher DTIs may see tighter credit conditions as the limit approaches.
About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.
