Australia - (APRA) Regulator new measures on mortgage lending

APRA news, these headlines via Reuters

• APRA says initiating additional supervisory measures to reinforce sound residential mortgage lending practices


• Says to limit the flow of new interest-only lending to 30 per cent of total new residential mortgage lending


• Says to place strict internal limits on volume of interest-only lending at lvrs above 80 per cent

• Says banks to manage investor lending to comfortably remain below benchmark of 10 per cent growth


• Says banks to ensure serviceability metrics, including interest rate and net income buffers, are appropriate for current conditions


• Says banks to restrain lending growth in higher risk segments of the portfolio


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  APRA says to monitor share of interest-only lending, may impose restrictions if exceed 30 pct of new mortgage lending

  
  

Australian Prudential Regulation Authority (APRA)

Surging house prices (mainly in the two largest cities in Australia, Sydney and Melbourne) have been a concern for Australian authorities. Concerns centre of financial stability risks and household leverage insofar as it impacts on spending and the wider economy - RBA Governor Lowe has referred to this in recent speeches. Housing affordability is also a political issue.

What this means for Reserve Bank of Australia monetary policy is that if these new moves from APRA succeed in putting a lid on house price growth it opens the door further to RBA easing, should they Bank want to go down that path. Arguments abound as to why the RBA should cut rates further (there are arguments they should not, also).

A couple of years ago APRA implemented tightening changes - had an impact for around 18 months or so (I need to refresh my memory) ...

This today is, or could be, a big deal. AUD is doing nothing ... but this is something to take note of for coming months.

here is the APRA media release on this: APRA announces further measures to reinforce sound residential mortgage lending practices

Australia - (APRA) Regulator new measures on mortgage lending
Australia - (APRA) Regulator new measures on mortgage lending
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