APRA has announced that it is activating a debt-to-income (DTI) lending limit on residential mortgage lending as a macroprudential tool to prevent the potential build-up of housing-related vulnerabilities.
The limit – effective from 1 February 2026 – 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. The limit will apply to ADIs’ owner-occupier and investor portfolios separately. Within the limit, banks retain discretion to lend to creditworthy high DTI borrowers, in line with their own risk appetite and lending policies.
APRA will provide ADIs with exemptions from the DTI limit for bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings.
This limit is in addition to other currently active tools which include:
- the countercyclical capital buffer, which builds resilience in the banking sector and can provide additional flexibility to support the provision of credit in significant downturns; and
- the serviceability assessment buffer, which builds additional resilience for individual new loans and so, over time, in lenders’ housing loan portfolios, to help withstand future stress.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
