All finance quotes are provided free (via our secure server) and without obligation. We respect your privacy.
CAR LOANS
AUSTRALIA
SHARE
Share this news item!
APRA's New Cap on High Debt-to-Income Home Loans: What Borrowers Need to Know
Understanding the Implications of APRA's Latest Lending Restrictions
1
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 announced a significant policy change aimed at mitigating emerging risks in the housing market.
Effective February 2026, APRA will impose a cap on high debt-to-income (DTI) home loans, limiting banks to issuing no more than 20% of new home loans with DTI ratios of six times or higher.
This measure applies to both owner-occupier and investor loans, excluding new housing developments.
APRA Chair John Lonsdale emphasized the proactive approach, aiming to reduce high-risk lending before it poses systemic threats. The banking sector’s exposure to residential mortgages makes it particularly vulnerable to housing shocks. This is APRA’s first loan regulation change since 2017 and aligns with similar actions in New Zealand and Canada.
The move follows recent interest rate cuts and government stimulus for first-home buyers, which have spurred record property prices and an 18% surge in investor loans last quarter. Market expectations now lean toward a potential rate hike by the Reserve Bank of Australia, currently holding at 3.6%. The Australian Banking Association supports the policy, praising the exemption that supports housing supply.
For borrowers, this means that securing a high DTI loan may become more challenging. Prospective homebuyers should assess their financial positions and consider strategies to improve their DTI ratios, such as increasing income or reducing existing debts. Consulting with financial advisors or mortgage brokers can provide personalized guidance tailored to individual circumstances.
Published:Thursday, 18th Dec 2025 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating emerging risks in the housing market. Effective February 2026, APRA will impose a cap on high debt-to-income (DTI) home loans, limiting banks to issuing no more than 20% of new home loans with DTI ratios of six times or higher. This measure applies to both owner-occupier and investor loans, excluding new housing developments. - read more
The Commonwealth Bank of Australia (CBA), the nation's largest lender, has recently voiced concerns regarding the escalating demand for home loans, suggesting that this surge may be contributing to unsustainable property price increases. CEO Matt Comyn highlighted that while the bank benefits from the current housing credit boom, a more moderate growth rate would better support long-term financial stability and housing affordability. - read more
Welcome to Car Loans Australia, a proud member of the Financial Services Online network. Owned and operated by Clark Family Pty Ltd, A.C.N. 010 281 008, we are dedicated to helping Australian individuals and businesses find the best financial products, services, information, and advice available online.
calculatorWidget
knowledgeBaseWidget
Our Commitment
At Car Loans Australia, we do not endorse specific financial products or offer financial advice. Instead, we connect you with specialist financiers, insurers, or other financial advisors who can provide expert guidance based on your unique circumstances. Please note that Car Loans Australia may receive a fee or commission for these referrals.
Information and Guidance
The financial information on our website, including articles and news items, is intended for general informational purposes only. It should not be considered a substitute for professional advice. We strongly recommend consulting a qualified, licensed financial advisor to discuss your specific situation before making any financial decisions.
Connecting You with the Right Solutions
Our primary role is to facilitate connections between you and the right financial resources. Whether you need a specialized financier or an expert advisor, we aim to introduce you to professionals who can help you achieve your financial goals.
Contact Us
We are here to assist you with any questions or further information you may need. Please feel free to reach out to Car Loans Australia for assistance.
