Last week, the Australian Prudential Regulatory Authority (APRA) released its new prudential standard, effective February 2026, which caps high-risk mortgages (debt-to-income ratio over 6x) at 20% of new lending.
APRA’s announcement aims to manage housing vulnerabilities preemptively amid rising prices but excludes new housing builds and applies portfolio-wide, allowing banks flexibility while aligning with government goals to boost affordability through supply incentives.
As illustrated below by Justin Fabo from Antipodean Macro, only around 6% of current loans exceed this threshold. Therefore, it is possible for high DTI exposures to triple before they surpass the regulatory speed limit.
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