APRA’s New DTI Lending Caps Start 1 February 2026: What Property Investors Need to Know

For property investors, the regulatory landscape is about to tighten. On 27 November 2025, the Australian Prudential Regulation Authority (APRA) confirmed what many in the industry had been anticipating: strict limits on debt-to-income (DTI) ratios will come into force from 1 February 2026.

This isn’t a drill. If you have an existing portfolio or are planning to expand, you have a narrow window to act before these new rules fundamentally change your borrowing options.

Why APRA Is Acting Now

In its System Risk Outlook released in November 2025, APRA highlighted high household debt as a key vulnerability in Australia’s financial system. The gross debt of Australian households has remained at approximately 1.8 times their income for almost a decade—high by both historical and international standards.

More critically, APRA has observed a pick-up in riskier forms of lending as interest rates have fallen. Housing credit growth has climbed above its longer-term average, property prices have risen further, and investor lending hit record levels in the September 2025 quarter—surging 17.6% in just three months to nearly $40 billion.

“At this point, the signs of a build-up in risks are chiefly concentrated in high DTI lending, especially to investors.” — APRA Chair John Lonsdale

The New ‘6 Times’ Rule: What’s Changing

From 1 February 2026, banks and other authorised deposit-taking institutions (ADIs) will be limited in how many high-DTI loans they can write. Here’s what you need to understand:

The Cap

• Banks can issue no more than 20% of new mortgage lending at a DTI ratio of 6 times or higher
• The limit applies separately to owner-occupier and investor lending portfolios
• Compliance will be measured on a quarterly basis

What’s Exempt

• Bridging loans for owner-occupiers
• Loans for the purchase or construction of new dwellings (to avoid constraining housing supply)

Why Investors Are Most Affected

APRA has made clear that investors will bear the brunt of these changes. Currently, around 10% of new investor loans have DTI ratios at or above six, compared to just 4% for owner-occupiers. As banks approach the 20% cap, they’ll become increasingly selective about which high-DTI investor loans they approve.

Current State vs. Future State

Where We Are Now

• High-DTI lending remains well below the 20% cap (currently around 5.5% of all new lending)
• Only a small number of ADIs are currently near the limit for investor lending
• The existing 3% serviceability buffer remains the primary constraint on borrowing
• Non-bank lenders currently operate under different rules (regulated by ASIC, not APRA)

What Changes After 1 February 2026

• Banks will have a hard cap on high-DTI lending—a formal guardrail that didn’t exist before
• As interest rates fall further, high-DTI lending typically increases—the cap will prevent this from spiralling
• Banks approaching the limit may tighten criteria, increase pricing, or simply decline marginal applications
• APRA has signalled it may extend these rules to non-bank lenders if they contribute to financial stability risks

Important: In 2021, almost one in four new mortgages (over 24%) had a DTI ratio of six times or more. APRA is acting now to prevent a return to those levels as rates continue to fall.

Why the Next Two Months Matter

We are currently in a transition window. The rules don’t take effect until 1 February, but lenders are already beginning to tighten credit policies in anticipation. Here’s why acting now is critical:

1. Pre-approvals obtained now may be assessed under current, more flexible criteria
2. Banks won’t wait until 1 February to adjust their risk appetite—many are already reviewing high-DTI applications more carefully
3. Refinancing and equity release become harder once your total debt pushes you above 6x income under the new measurement framework
4. Settlement timelines mean any application lodged in January may not settle until after the new rules apply

Strategic Actions for Portfolio Investors

If you have a portfolio of two or more properties, your DTI is likely approaching the new limit. Here’s what to consider:

1. Release Equity Now

If you need cash for renovations, a future deposit, or simply to create a buffer, refinance to release that equity before February. Once the rules change, you may find yourself “equity rich but serviceability poor”—unable to access the wealth locked in your properties because your total debt exceeds the new thresholds.

2. Consolidate High-Interest Debt

High-interest personal loans, car finance, and credit cards hurt your DTI ratio disproportionately. Consolidating them into your mortgage now can lower your overall debt obligations on paper, potentially keeping you under the 6x cap and preserving your borrowing capacity for future investments.

3. Review Your Portfolio Structure

Now is the time to assess whether your current loan structures are optimal. Consider whether interest-only loans, offset accounts, or different lender arrangements could improve your position before the regulatory environment tightens.

4. Lock in Any Planned Purchases

If you were planning to add to your portfolio in early 2026, bringing that timeline forward could be the difference between approval and decline. Remember that loans for new dwellings are exempt from the cap, so consider whether off-the-plan or new-build purchases might offer strategic advantages.

What APRA Is Signalling for the Future

This isn’t necessarily the end of APRA’s intervention. The regulator has explicitly stated it “will consider” further investor-specific measures if macro-financial risks continue to build. Previous interventions have included:

• 2014-2017: 10% annual growth cap on investor loans
• 2017-2018: 30% ceiling on interest-only lending
• 2021: Increase in serviceability buffer from 2.5% to 3%

The message is clear: APRA is watching investor activity closely, and the current DTI cap may be just the first step if risks continue to accumulate.

The Bottom Line

The introduction of DTI limits represents a fundamental shift in how highly leveraged investors will be able to operate. While APRA has positioned this as a “guardrail” rather than a “handbrake,” the practical effect for investors with significant portfolios could be substantial.

The window between now and 1 February 2026 offers a unique opportunity to:

• Assess your current DTI position across all lenders
• Release equity or consolidate debt while criteria remain more flexible
• Complete any planned portfolio expansion before the new rules bite
• Structure your finances to remain under the 6x threshold going forward

Don’t Wait Until It’s Too Late

At Sanford Finance, we’re already helping investors navigate these changes. Our team can assess your current DTI position, identify opportunities to optimise your portfolio structure, and help you take action before the February deadline.

Contact us today for a portfolio review and find out exactly where you stand before these new rules take effect.

Disclaimer: This article provides general information only and does not constitute financial advice. Your personal circumstances may vary. The information in this article was current as at November 2025. Please contact Sanford Finance or speak with a qualified financial adviser before making any decisions about your investment strategy or borrowing arrangements.