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Australian banking regulator confirms looser mortgage lending rules

[SYDNEY] The Australian prudential regulator on Friday confirmed changes to its mortgage serviceability requirements and the removal of a minimum 7 per cent interest testing rate that banks are currently required to use in stress tests of customers' loan applications.

The Australian Prudential Regulation Authority (APRA) said the changes were effective the same day, following a review of its proposals announced in May.

The regulator added loan repayment assessments can now use a mortgage rate buffer of at least 2.5 percentage points for their lending assessments.