APRA will Change Loan Serviceability Floor

By Sophia Rodrigues

Published On 31 Jan 2019 , 06:33 AM

Given there isn't any other quantitative restriction with respect to macroprudential policy for housing market that APRA can ease, I always felt lowering the 7% floor for calculating loan serviceability would likely be the next option they would consider. I am therefore pleased to see Macquarie's Justin Fabo write about in a research note. The outlook for RBA monpol has changed. There's as much chance of steady cash rate for longer as there is of a cut, which means hike is a long way off. So it makes no sense having 7% floor because it would take a few years -- if at all -- for mortgage rates to reach that level. All APRA has to do is reduce the floor to 6.5% and leave it up to banks and their lending standards to decide if 6.5% is appropriate or slightly higher, depending on individual circumstances. Will they do this? There's a good chance they will.

LATEST SNIPPETS

Results of RBA's Bond-buying Auction Monday

Results of the RBA's bond-buying auction Monday, consisting of A$1.5 billion under 3-year yield target and A$2.0...

Published on : 09 Nov 2020 , 03:54 PM
RBA buying total A$3.5B under 3-yr target, QE

The RBA is buying A$3.5 billion of government bonds today, with A$1.5 billion as part of its 3-year yield target, and...

Published on : 09 Nov 2020 , 11:33 AM
Headline from RBA Nov Statement on MonPol

RBA Not Contemplating Further Reduction In Interest Rates
RBA: Focus Will Be QE Program, Prepared To Buy More...

Published on : 06 Nov 2020 , 11:34 AM
RBA buying A$2B of Nov 2028-May 2032 at 1st QE

The RBA is buying A$2 billion of November 2028 to May 2032 government bonds (excluding December 2030 bonds) as p...

Published on : 05 Nov 2020 , 11:21 AM
RBA re-opening media lockups?

It appears the RBA's media lock-ups will restart from Friday when the Statement on Monetary Policy will be publis...

Published on : 04 Nov 2020 , 04:16 PM
Headlines from RBA Lowe's Speech Tuesday

RBA Lowe: No Change in View Little To Be Gained from Negative Policy Rate
RBA Lowe: Negative Policy Rate Extra...

Published on : 03 Nov 2020 , 04:06 PM
More Headlines from RBA Policy

Any bond-buying to support 3-yr target would be in addition to A$100B QE

Not expecting to raise cash rate f...

Published on : 03 Nov 2020 , 02:35 PM
Headline from RBA's November MonPol Decision

From the RBA's November Monetary Policy Decision statement:

-Cuts cash rate target to 0.1% from 0.25% Published on : 03 Nov 2020 , 02:31 PM

RBA TFF drawdown steady since Sep 30 as bks await rate cut

Total amount drawdown from the RBA's Term Funding Facility has been unchanged for three straight weeks...

Published on : 30 Oct 2020 , 04:13 PM
Australia Note yields continue declining on expectation of 1bp ES rate

Yields fell further to new record lows at the AOFM weekly T-Note tenders as market factors in the possibili...

Published on : 29 Oct 2020 , 10:42 AM