Why the "Real" deadline is December, and how to protect your pipeline.
The activation of DTI limits by APRA represents the single most immediate operational threat to broker pipelines in late 2025.
While the official commencement date is February 1, 2026, the practical reality of banking operations dictates that lenders will adjust their credit decisioning engines well in advance—likely as early as December 2025—to ensure they do not breach the 20% cap in the first reporting quarter.
Critical Insight: The industry has operated under "expectations" for years, but APS 220 Attachment C formalizes this into a rigid ceiling. A lender may be "open for business" for high-DTI loans in month one, but effectively "closed" by month three if their 20% bucket is full.
The crucial nuance often missed in general reporting is the "rationing" effect. Unlike serviceability buffers, which are static calculations applied to every loan, a portfolio limit is dynamic.
APRA’s directive is explicit: ADIs must limit new residential mortgage lending with a Debt-to-Income (DTI) ratio of ≥6x to 20% of the total value of new lending. This applies separately to owner-occupier and investor portfolios.
This creates a scarcity mindset. High-DTI loans are not banned, but they are now a finite resource that lenders must ration carefully.
Investors are the primary target. While overall high-DTI lending has been moderate, it is rising among investors seeking to leverage back into the market. The "shading" of rental income (often at 80%) in servicing calculators creates a disparity where an investor's actual DTI might be lower than the assessed DTI used for the cap, trapping them in the restriction.
Brokers must immediately review their pipeline. A pre-approval issued in November 2025 at 6.5x DTI may be voided if the loan is not unconditionally approved before the lender’s internal policy switch.
Run a report on your CRM for all active pre-approvals. Specifically filter for clients with a DTI > 5.5x. Why 5.5x? Because lender buffers and shading might push a "safe" 5.5x client over the 6x threshold in the bank's official reporting.
Advise clients with high leverage requirements to convert pre-approvals to formal approvals before the Christmas shutdown. The risk of a January policy freeze is high as banks configure systems for the Q1 reporting period.
Brokers can no longer rely on a single lender's DTI appetite. Major banks often hit caps faster due to volume. Familiarize yourself with smaller ADIs or mutuals that may have more "bucket space" available for high-DTI investor loans.
The "2026 Borrowing Ceiling" isn't just a compliance issue for banks; it's a pipeline risk for brokers. Proactive auditing today will prevent declined applications in January.
Download the High-DTI Checklist