Australia Caps Risky Loans as Home Prices and Credit Surge

Australia’s banking regulator will tighten mortgage-lending rules to curb a potential build-up of financial stability risks as credit growth accelerates and house prices climb to record highs.

From Feb. 1, banks will be limited to issuing up to 20% of new mortgages to borrowers taking on debt at six times their income or higher, the Australian Prudential Regulation Authority said in a statement on Thursday. The cap will apply separately to loans for owner-occupiers and for investors.