Major banks have lopped tens of thousands of dollars off how much they are prepared to lend home buyers reflecting tougher lending standards as property prices weaken.

A couple with combined income of $120,000 purchasing an investment property will have to make do with up to $80,000 less from a major bank than they would have had a year ago.

Tighter lending policies are also affecting owner-occupiers.

Tighter lending policies are also affecting owner-occupiers. The maximum loan size for the same hypothetical couple buying a home to live in has fallen by up to $65,000, according to calculations by mortgage broker Homeloanexperts.com.au.

The sharp decline in customers "borrowing power" highlights the impact of tighter bank credit policies, which were introduced during 2015 amid regulators' concerns that mortgage lending had become too risky.