Should brokers be worried about APRA's new lending rules?

From 1 February, all banks across Australia will need to operate under tighter debt-to-income (DTI) settings thanks to new rules put in place by the Australian Prudential Regulation Authority (APRA).

APRA’s incoming DTI settings will limit how many loans banks can approve in instances where the borrower's total debt represents more than six times their gross annual income.

It is less of a hard ban and more of a cap. To be precise, no more than 20% of a bank's new lending can sit above the six-times DTI level.

As the rules come into force, banks are expected to triage who gets access to high-DTI loans, effectively favouring borrowers who look lower risk on other metrics such as loan‑to‑value ratio, surplus cash flow and asset buffers.

In announcing the changes, APRA chair John Lonsdale said they are necessary to “mitigate financial stability risks at a system-level”. 

“One of the key structural risks to system stability that APRA has long been concerned about is high household indebtedness. Rising indebtedness has in the past often been associated with an increase in riskier lending and rapid growth in property prices,” said Lonsdale, adding: “At this point, the signs of a build-up in risks are chiefly concentrated in high DTI lending, especially to investors.”

Some brokers see this as an incidental change at best, given barely 5% of owner-occupier and 10% of investor loans currently hit six-times DTI.

But others believe it could have a genuine effect on how they do business, particularly for brokers dealing with high-net-worth, high-earning clients.

A preemptive measure

Mortgage broker Avril Clutterbuck (pictured), who works as a credit adviser at Azura Financial, reckons regulators are “being proactive rather than reactive” with the move. They are not reacting to current problems, but “looking ahead to the future (with) a focus on preventing future financial stress, particularly if the economy softens”.

This reflects APRA’s stance, with Lonsdale saying: “By activating a DTI limit now, APRA aims to pre-emptively contain risks building up from this type of lending and strengthen banking and household sector resilience.”

The rules target “a small group of highly leveraged borrowers…generally the investor market and the higher income earners”, explains Clutterbuck.

Since her brokerage is tailored to higher income earners, particularly within the medical sector, Clutterbuck handles a high volume of deals around the six-times DTI level, although these clients present a low risk, often with 50% LVRs and substantial assets they can sell down.

Given her client profile, Clutterbuck thinks the incoming changes “will impact my client base more so than others, potentially”, although she acknowledges the importance of protecting Australians from slipping into mortgage stress.

“But it's just a matter of making sure those other client types (aren’t) negatively impacted as well,” she adds.

While Clutterbuck doesn’t expect the DTI changes to crash demand, they will quietly reshape how she operates and who she writes clients’ loans with.

Because some banks will hit their 20% DTI cap sooner than others, she expects fewer options for certain clients and more pricing differentiation, with lenders “changing rates for those higher risk clients”.

To protect conversion and client experience, Clutterbuck has been proactively reaching out to the banks she regularly uses to get an understanding of how they intend to tackle the DTI policy changes.

Put simply, the new DTI rules aren’t expected to rattle the broking industry, but they could mean more front‑end triage, heavier lender selection work, and tighter structuring for high‑income clients.

More to come?

While these DTI incoming changes are relatively light touch, they could be a harbinger of greater regulatory intervention ahead.

It comes down to the surge in investor lending in the Australian property market, with investors now comprising 40% of new mortgage flows. In the three months to September 2025 alone, annualised investor lending surged by a walloping 20%, proving just how bullish the investor market has become.

Some analysts believe this is unfairly skewering the market away from and pricing out first-home buyers and owner-occupiers, while heaping more risk into the system.

The major banks have already started reassessing their risk profiles amid heightened regulatory scrutiny.

ANZ, Commonwealth Bank and Macquarie have limited (or banned entirely in Macquarie’s instance) home lending to trusts and companies, ostensibly in response to the tactic being used to circumvent assessment and serviceability requirements.

“I completely understand the reaction from the banks,“ Clutterbuck said of these developments. “These types of structures and some of the lender policies that were around made it possible for people to use them irresponsibly. They were hiding debts just to inflate their borrowing capacity. So that's obviously… very concerning as those people are borrowing well beyond their means.”

Some political voices would like to see APRA do more to curb excessive investor lending, although in Clutterbuck’s view, while certainly not a non-event, “I don't think (the DTI changes) will necessarily mean the start of aggressive intervention. I think it's more just a fine tuning”.