12/01/2026
What Brokers Need to Know
As we move into 2026, the Australian mortgage market is shaping up to be defined by prudent credit management, tighter risk frameworks, and evolving lender approaches that brokers should understand and proactively navigate. Following an extended period of strong credit growth and rising property prices, regulators and banks are recalibrating how lending is underwritten, especially in areas like Company & Trust lending and Debt-to-Income (DTI) policy limits.
Company & Trust Lending: A Shift Towards Prudence
One of the clearest signals from major lenders late in 2025 and into early 2026 has been a tightening of lending to trusts and corporate entities – a trend that’s set to persist this year.
Major institutions like Macquarie Bank have paused new home loans to trusts and companies entirely, citing rising compliance complexity and concerns over aggressive structuring via social media-driven strategies. Existing trust loans won’t be unwound, but new applications are effectively off the table.
Similarly, Commonwealth Bank (CBA) now only considers trust or company applications from borrowers who have an existing relationship, and ANZ has followed suit with tightened criteria including personal guarantees, ownership thresholds and stricter LVR limits.
What this means for brokers in 2026:
- Trust lending will no longer be a reliable fallback strategy for many borrowers seeking additional borrowing capacity or portfolio growth.
- You’ll need to shift conversations earlier toward personal name lending structures, or alternative strategies that align with tightened policies.
- Educating clients on why these changes are happening and how they impact risk, compliance and long-term financing plans will be essential to maintaining and growing your referral pipeline.
This cautious stance reflects both regulator sentiment and banks’ growing focus on institutional risk controls amid economic uncertainty.
DTI Policy & Borrowing Capacity: New Guardrails Take Effect
Perhaps the most talked-about regulatory change for 2026 is the introduction of formal debt-to-income (DTI) limits by the Australian Prudential Regulation Authority (APRA). This is the first time Australia has imposed a quantitative cap on high-DTI lending and it matters for borrowing capacity across the board.
From 1 February 2026, APRA requires authorised deposit-taking institutions (ADIs) to limit high-DTI mortgages, defined as loans with total debt of at least six times the borrower’s income, to no more than 20% of new lending in both owner-occupier and investor portfolios.
This isn’t a punitive clamp-down, it’s a prudential guardrail designed to maintain financial stability:
- It targets riskier lending exposures before they can build up materially.
- The cap applies on a quarterly basis, meaning lenders will monitor their portfolio mix more closely and may tighten internal criteria if they near the 20 per cent threshold.
Why this matters for brokers:
- Borrowers with high DTI profiles (often investors or those with multiple income streams) may find true borrowing capacity reduced relative to previous cycles.
- Lenders reaching their DTI quota may become more conservative with income assessments, add-backs and servicing buffers, even if serviceability tests are met.
- The practical flow-on effects can include higher rates, increased scrutiny on non-standard income, and more emphasis on lower-risk LVR profiles.
Crucially, most lenders are not near the 20% cap yet, and APRA’s policy includes exemptions including bridging finance and loans for new dwelling construction so it’s not an immediate credit blockage. But in a rising interest rate environment and with housing prices still elevated, these guardrails will influence how banks manage capacity and assess risk.
Cash-Out Policy: Accessing Equity with Caution
Another key area shaping lender policy in 2026 is cash-out refinance and equity access. As property values have risen, and in some markets continue to climb, more borrowers are exploring cash-out refinancing to access equity for renovations, investment, or debt consolidation. In early 2025, cash-out refinances made up a notable share of total refinance activity, with almost 30% of refinance deals involving some form of cash-out, up from around 22% in 2023, as competition among lenders increased and digital platforms made the process smoother.
However, lenders have responded with stricter policy settings around cash-out facilities. Many banks now cap cash-out refinance at around 80% LVR for owner-occupiers with strong credit, and require clear documentation on the purpose and sustainability of larger cash-out amounts particularly where funds are intended for higher-risk uses like investment property or non-core asset purchases.
What this means for brokers in 2026 is a balancing act: while equity access remains an important tool for clients, it needs to be structured responsibly and documented thoroughly. Borrowers should be prepared for greater scrutiny on how funds will be used and ensure that expanded debt still meets serviceability tests under both lender and regulatory expectations. As banks tighten their risk frameworks, a strategic and compliant approach to cash-out refinance will be vital to successfully securing these facilities.
Rates, Demand and Market Dynamics
Economically, forecasts for 2026 suggest a cautious balance between inflation pressures, labour market resilience, and housing demand:
- Most major lenders and economists are now modelling a stable or slightly rising cash rate environment through 2026, reflecting sustained inflation pressures – a notable shift from earlier expectations of rate cuts.
- While demand remains firm, especially in key capital cities, tightened regulatory settings like DTI limits and higher serviceability buffers will temper the most exuberant lending behaviours.
For brokers, this means preparing for a market where lending isn’t getting easier – it’s getting smarter. Borrowers are still borrowing, credit is still flowing, but quality, compliance and risk appetite are the headline themes this cycle.
What Brokers Should Do Now
- Update clients early about DTI limits and how that may affect borrowing power – especially for multi-property investors.
- Re-evaluate trust-based strategies and pivot to structures that align with lenders’ new risk appetites.
- Lean into professionalism and education, positioning yourself as both a broker and a strategic adviser.
- Keep a close eye on product policy shifts as lenders adjust internal criteria around DTI compliance.
At FINSTREET, we’re here to help brokers navigate these changes confidently from product insights to real-time policy shifts and strategic lending pathways.
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