The Australian Prudential Regulation Authority (APRA) imposed restrictions on new mortgages that would push a borrower’s DTI ratio above six on 1 February, limiting them to no more than 20% of a bank’s new home loans.
Mortgage broker Alex Veljancevski said one major bank is moving ahead of the watchdog, refusing to lend to applicants with DTI ratios of seven or more, even if all other criteria are met.
Meanwhile, banks more broadly are hitting the brakes for investors purchasing multiple properties.
"What a lot of people don't realise is that banks aren't waiting to hit the 20% ceiling before they act,” said Mr Veljancevski, the founder and mortgage broker at Eventus Financial.
“So even though APRA's rule allows lending up to six times income, certain lenders are pulling back before they reach that threshold.”
He said it doesn’t appear that owner‑occupiers or ‘mum and dads’ buying one or two investment properties are being impacted.
“The majority of investors that are impacted are ones with multiple investment properties - like five-plus,” he said.
“Sophisticated investors [who] still have capacity to borrow more due to high incomes and so forth … they are still meeting the servicing test but now they're restricted by DTI, which means that they have to explore alternate options.”
Banks not at risk of exceeding APRA restrictions: Industry
The APRA restriction aims to protect financial stability in Australia amid the nation’s hot housing market.
According to industry figures and the watchdog, no bank is nearing the new speed limit, though investor lending is growing at a notably faster rate than previous limitations allowed.
APRA regulations in place from 2014 to 2018 saw a ‘speed limit’ imposed on investor lending growth, with banks not allowed to grow their investor loan book by more than 10% a year.
Australian lenders wrote $43 billion worth of investment home loans in the December quarter, according to ABS statistics - a 32% year-on-year increase.
Though, banks appear to be in good stead to weather the current APRA limitations.
“Those debt to income ratios … are not ones that banks are breaching, or even close to breaching, at present,” Australian Banking Association CEO Simon Birmingham told the Savings Tip Jar podcast in February.
“They are sending a signal into the market and also ensuring that, financially, banks continue to operate in a safe and secure way to make sure people are able to meet their lending obligations.”
High DTI home loans are on the uptick in recent times, with 6.1% of new mortgages written in the three months to September bearing the high-risk measure, compared to 5.6% in the same period of 2024, according to APRA figures.
APRA restrictions may drive investors towards non-bank lenders
The alternative option that Mr Veljancevski highlights is non-bank lenders.
Non-bank lenders, which accounted for less than 10% of new mortgages in late-2025, aren’t regulated by APRA and don’t have to abide by the DTI restrictions.
However, Mr Veljancevski warns that, like any category of lender, non-banks won’t suit every borrower.
"It's not a straight swap,” he said.
“Non-bank products can come with higher rates or different conditions, so you need to go in with your eyes open and get proper advice.
“But for the right borrower, it can absolutely be the right solution."
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