The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
UPCOMING EVENT - INDUSTRIAL AND LOGISTICS SUMMIT 16 OCTOBER, SYDNEY
INDUSTRIAL AND LOGISTICS SUMMIT - TICKETS NOW ON SALE
LEARN MOREDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ResidentialEditorial DeskTue 18 Dec 18

APRA Scraps Interest-Only Lending Cap

TUD+ MEMBER CONTENT
63187ed9-754f-4483-80ea-6b8e895a6c5f
SHARE
12
print
Print

The Australian Prudential Regulation Authority will ease its curbs on interest-only residential mortgage lending, it announced on Wednesday.

The supervisory benchmark was put in place as a temporary measure, leading to significant declines in lending to investors and putting downward pressure on boiling house prices and Australia’s record high household debt-to-income ratio.

The proportion of new interest-only lending is now significantly below the 30 per cent threshold APRA introduced in March 2017.

APRA will remove the 30 per cent limit from 1 January 2019, with plans to conduct a review into banks’ lending practices next year.

Related: APRA Scraps Investor Loan Growth Cap

APRA chairman Wayne Byres said the lending curbs have "served their purpose".


In April, APRA removed the 10 per cent investor growth “speed limit” it had imposed in 2014.

APRA said that the removal of the caps was subject to the banks providing “certain assurances” about the strength of their lending standards.

“APRA’s lending benchmarks on investor and interest-only lending were always intended to be temporary,” APRA chairman Wayne Byres said.

“Both have now served their purpose of moderating higher risk lending and supporting a gradual strengthening of lending standards across the industry over a number of years.”

In a letter to the banks, APRA said that its curbs had reinforced sound residential mortgage lending practices and “significantly improved” the banks’ lending standards.

The result, APRA says, is more resilient banks and better overall financial system stability.

Interest-only lending still ‘higher risk’

Owner-occupier interest-only lending remains a higher risk form of lending, the regulator said.

“APRA expects that ADIs will maintain prudent internal risk limits on interest-only lending.

“These internal limits should cover both the level of new interest-only lending and the type, including lending on an interest-only basis to owner-occupiers and lending on an interest-only basis at high LVRs.”

The regulator says it plans to conduct a review of banks’ risk controls on interest-only lending in 2019 and will continue to “closely monitor” conditions in the housing market.

ResidentialAustraliaFinancePolicyReal EstatePolicy
AUTHOR
Editorial Desk
More articles by this author
ADVERTISEMENT
TOP STORIES
Salta MD Sam Tarascio
Exclusive

Why Salta Won’t Break Ground on $400m Pipeline

Leon Della Bosca
7 Min
Exclusive

Precinct Proposals Bloom as Brisbane Middle-Ring Sheds its Past

Phil Bartsch
8 Min
Exclusive

Newest Land Lease Player Plots Sector Shake-Up

Taryn Paris
5 Min
Waterloo Affordable Mirvac hero
Exclusive

Affordable Housing Rules Tighten as Proposal Deluge Continues

Clare Burnett
5 Min
Exclusive

Beyond the Aerotropolis: How Airports are Turning into Cities

Taryn Paris
6 Min
View All >
SHMH Penrith hero
Residential

First Stage Filed for $1.1bn Penrith Masterplan

Clare Burnett
Life Sciences

NSW Healthcare Asset Portfolio Comes to Market

Lindsay Saunders
Planning

State Goes Public with Plans for 10,000 Victorian Homes

Lindsay Saunders
The state has okayed the 300-home Greenvale North scheme as projects at Ballarat and Warrnambool open for comment...
LATEST
SHMH Penrith hero
Residential

First Stage Filed for $1.1bn Penrith Masterplan

Clare Burnett
3 Min
Life Sciences

NSW Healthcare Asset Portfolio Comes to Market

Lindsay Saunders
4 Min
Planning

State Goes Public with Plans for 10,000 Victorian Homes

Lindsay Saunders
2 Min
Architecture

Bondor Metecno’s MetSeam Elevates Facade Design Style

Partner Content
5 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/apra-scraps-interest-only-lending-cap