APRA has moved to cool Australia’s overheated property boom. In November 2025 the prudential regulator announced banks must cap at 20% the share of new home loans with very high debt-to-income (DTI) ratios – specifically loans worth more than six times a borrower’s income. This “guardrail” comes amid record lending growth and rising prices. Recent data show affordability is at its worst on record, with a typical household spending nearly half its pre-tax income on a new mortgage.

Source 

As buyer’s agents, we see how this affects borrowers. In practice, owner-occupiers (including first-home buyers) are unlikely to be hit immediately – APRA notes most of their loans already have lower DTIs. But banks will now scrutinise big loans more closely. In effect, borrowing power will be more limited: buyers should not assume they can stretch to the maximum loan size. A loan at 6× income is very high gearing, so we advise clients to focus on safe borrowing (well below that threshold) with room to absorb rate changes. Getting finance pre-approved early is more important than ever. Line up your paperwork, confirm a sensible budget, and avoid relying on the absolute maximum you might borrow.

Key takeaways for buyers:

• Borrowing power reset. Lenders must now limit high-DTI lending to 20% of new mortgages. This means banks will be careful about very large loans. For most buyers (who typically have modest DTIs), the impact will be small in the short term. Still, plan conservatively. Instead of chasing the highest loan you can qualify for, work out what you can comfortably repay even if rates rise. Securing pre-approval and maintaining a larger deposit will give you confidence as banks tighten criteria.
  
• Investor competition remains fierce. About 2 in 5 new loans are to investors, and their appetite has surged (investor loan values rose 18% in Q3 2025). In other words, many cash-ready investors are bidding in the market. This drives up prices, even as high-leverage loans are capped. We’ve seen well-priced homes attract multiple offers. A buyer’s agent can help by using market data (rents, vacancy rates, supply pipelines) to identify suburbs where owner-occupiers have an edge. For example, growth corridors in Brisbane or stable areas in Adelaide might offer better value and rental yields. Our data-led approach finds these pockets of opportunity, so you’re not competing head-on with every investor.
  
• Strategic suburb selection. With affordability tight, suburban strategy matters. Focus on areas with strong long-term fundamentals (good amenities, employment growth, infrastructure) rather than the most hyped markets. Avoid overbidding in “hot” investor hubs; instead, target up-and-coming suburbs where price momentum isn’t totally driven by investors. Our team analyses local stats to build a shortlist of suburbs that fit your budget. This helps you find a home with solid growth potential without relying on risky debt levels.
  
• Long-term outlook. Remember, APRA’s cap is a stability measure – not a quick fix to make homes cheaper. Domain research confirms the limit is “a guardrail for stability, not a handbrake on demand”. If investor activity spikes, we may see more borrower rules (APRA has warned additional investor-specific limits could follow).
  

Key2Dreamz buyer’s agents can help you interpret each lender’s criteria and refine your search. We’ll ensure you only bid on homes that fit a safe, sustainable budget and use data to target suburbs with real value. For personalised guidance, contact our team at +61 439 260 917 or book a free consultation.