APRA tightens home loan rules, raises interest rate benchmark

The banking regulator has announced tougher serviceability tests for home loans, which will make it harder for some borrowers to get a mortgage.

"All ADIs [authorised deposit taking institutions] should be operating with a buffer of at least 3 percentage points over the loan interest rate," the regulator warned. "Where ADIs continue to approve loans using a lower buffer rate beyond the end of October 2021, APRA will adjust individual prudential capital requirements to reflect higher credit risk inherent in new lending."

If they do not use this higher test, they will be financially penalised by having to hold more reserves against losses, which would reduce their profitability.For home loan applicants, it means the maximum amount people can borrow relative to their income and expenses will be lower than it was under the old serviceability test of 2.5 per cent.

'Members noted that a number of factors are expected to constrain house prices over the medium term. These include... slower population growth, changes to tax settings, and tighter bank lending rules...' If we fix the *demand* issues, we fix the housing crisis. VoteSustainable

Stop allowing mortgage interest to be deducted from salaries and wages income..

Find a way to target those going for their second, third, fourth, houses, with mortgages. We NEED to return to promoting young people as home owners.

Loans Loans Latest News, Loans Loans Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Australia's interest rate remains on hold at the historic low level of 0.1 per centThe Reserve Bank of Australia (RBA) today decided to keep the interest rate on hold despite criticism that historically low rates were "supercharging" the property market. Can't go lower, can it ? Joseph Goebbels would be proud of your Network. You even turned off all Youtube comments because YOU KNOW IT! Plan B
Source: 9NewsAUS - 🏆 10. / 72 Read more »

Australia's interest rate remains on hold at the historic low level of 0.1 per centThe Reserve Bank of Australia (RBA) today decided to keep the interest rate on hold despite criticism that historically low rates were "supercharging" the property market. jekearsley A Maori boy from NZ is predicting a spike in unemployment after mandating the vaccine for selected private sectors jekearsley How does this story mesh with the claim of the stunningly low unemployment rate? If there's a jobs rush with such low unemployment can we expect to see an increase in wages as business competes for employees? jekearsley Well duh! 🙄
Source: 9NewsAUS - 🏆 10. / 72 Read more »

RBA holds interest rates at record lows, sticks to bond buying programBreaking: The Reserve Bank has held official interest rates steady at 0.1 per cent and remains committed to its gradual wind back of its quantitative easing program | swrighteconomy swrighteconomy Inflation is coming swrighteconomy RBA is still clueless. swrighteconomy This is mad. It’s only making the cost of housing to go up and when rates go up again the houses will be cheaper as there will be more on the market.
Source: smh - 🏆 6. / 80 Read more »