APRA body has increased the minimum interest rate buffer expected to be used by banks, in a bid to tackle Australia’s increasing property prices
APRA says it expects lenders to assess borrowers’ ability to meet loan repayments at an interest rate that is at least 3 percent above the loan product rate.
APRA believes this decision “reflects growing financial stability risks from ADIs’ residential mortgage lending”
Meanwhile, the body’s Chairperson says “In taking action, APRA is focused on ensuring the financial system remains safe, and that banks are lending to borrowers who can afford the level of debt they are taking on – both today and into the future.”
