No matter how low interest rates may fall, banks should make sure new borrowers can repay their debts with mortgage rates of at least 7 per cent, new guidelines have confirmed.

The guidance, already widely followed across the industry, was formally adopted in a new policy that entrenches tougher rules on bank mortgage lending from the Australian Prudential Regulation Authority.

After recent signs of a resurgent property market in Sydney and Melbourne, the regulator also locked in various policies that it hopes will make sure banks are realistic in assessing borrowers' ability to repay their loans.

APRA on Monday updated its industry guidance to ensure banks are "prudent" in managing risks in the $1.5 trillion mortgage market, which accounts for about 60 per cent of domestic banks' loans.