Banks face mortgage lending restrictions in 2026, ASX loses steam

ABC NEWS (Australia)

The Australian Prudential Regulation Authority (APRA) will impose new restrictions on residential mortgage lending from February 2026, but it's unlikely to have any impact on house prices. While technology stocks continued to rebound overseas, the ASX 200 managed to end its day marginally higher.

Transcript

00:00So with property prices and investor loans hitting their highest levels ever, Australia's

00:06banking regulator APRA is introducing new restrictions on high risk lending. So from

00:12February the 1st, 20% of new mortgages issued by banks are allowed to have debt to income

00:16ratios of more than six times. Now let's simplify that a bit. Let's say your household

00:21earns $100,000 a year and you want to borrow more than $600,000 as either an investor or

00:27owner occupier. Only a fifth of the new loans issued by your bank are allowed to exceed

00:32that threshold. As for how effective that'll be, one prominent banking analyst says it's

00:37like banning blokes who are eight feet tall from going into restaurants. A lot of those

00:41around as you know. Now going back in time to 2014, APRA introduced an investor mortgage

00:47limit which allowed banks to grow their number of investor loans by 10% each year and house

00:53prices continued to rise. In 2017, it imposed a new rule saying only 30% of new residential

01:00loans could be interest only. Now that led to house prices falling quite a bit before APRA

01:05decided to wind back those restrictions. Then COVID happened, interest rates were cut to zero

01:10and house prices have never been higher. And in case you're wondering, the average Australian

01:15household's debt levels are about 180% greater than their incomes, which is far higher than most

01:21other countries. Meanwhile, the Australian share market has finished trading pretty much

01:25flat as tech related stocks did well, though that was offset by big falls in stocks like

01:30QBE and Harvey Norman. Now overseas markets did a lot better as their tech and AI stocks continued

01:36to rebound. Gold, oil and iron ore prices were a little bit higher. And the Aussie dollar is

01:41buying just under 65 and a half US cents. And that's finance.

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