Australia to cap high-risk home loans in Feb 2026 to reduce financial risks.

Starting in February 2026, Australia’s banking regulator APRA will cap high debt-to-income home loans at 20% of lenders’ capital for borrowers with debt exceeding six times their annual income, targeting both owner-occupiers and investors. The move aims to reduce financial risks from rising household debt and riskier lending as interest rates fall, though current lending standards remain stable. APRA warns risks could escalate quickly in a low-rate environment and may introduce further measures, including investor-specific limits, if needed. Federal Treasurer Jim Chalmers called the rule prudent, while Greens senator Barbara Pocock urged stronger action on investor lending, and opposition leaders linked the change to the government’s first-home buyer deposit scheme.