The Australian Prudential Regulation Authority (APRA) said Thursday it will limit high debt-to-income home lending to "pre-emptively" contain a build-up of housing-related vulnerabilities in the financial system.

The limit on home loans will allow banks to lend up to 20% of their new mortgage lending at a debt of six times income or more from Feb. 1, 2026, the regulator said in a statement. The limit will apply separately to the banks' owner-occupier and investor lending. It excludes bridging loans for owner-occupiers and loans for the purchase or construction of new dwellings.

The signs of a build-up in risks are chiefly concentrated in high debt-to-income lending currently, especially to investors, APRA Chair John Lonsdale said. The regulator has not yet seen signs of a broad-based build-up of housing vulnerabilities.

As interest rates fell in Australia, housing credit growth picked up to above its longer-term average and housing prices rose further, with APRA observing a pick-up in some riskier forms of lending over recent months.

After the announcement, shares of Commonwealth Bank of Australia (ASX:CBA) rose nearly 1% in recent trading on Thursday, and Westpac Banking (NZE:WBC, ASX:WBC) and ANZ Group's (NZE:ANZ, ASX:ANZ) New Zealand shares each gained about 1%. National Australia Bank (ASX:NAB) was a little changed.