Latest Products

Macroprudential Amendments

Tuesday 21 June 2022

Last week saw the regulator finalise their amendments to the macro-prudential framework.

The amendments are attached to the Prudential standard APS 220 Credit Risk Management and will take effect  on 1 September.

Australian Prudential Regulation Authority Chair Wayne Byres said in an official statement, “In the current environment, with high household indebtedness and rising interest rates, it is essential for banks to prudently and proactively manage risks in residential mortgage lending. APRA expects lenders to closely monitor housing lending risks to ensure that aggregate portfolio risks remain within their risk appetite and that standards for new lending remain prudent,” Mr Byres said.

In its letter to industry the regulator updates have also been made to Prudential Practice Guide  APG 223 Residential Mortgage Lending.

In an official statement the Australian Prudential Regulation Authority (APRA) said, “Under the new requirements, ADIs must be operationally prepared to implement certain macroprudential policy measures, if needed. In particular, banks will need to have systems in place to limit growth in higher risk residential mortgage lending, such as loans at high debt-to-income multiples or high loan-to-valuation ratios.”

As soon as possible
The letter  said, ”While some ADIs have indicated they may need further time to implement changes to technology systems and internal policies, APRA expects that these actions will be progressed as quickly as possible this year.”