Australia’s banking regulator to stick with current home lending rules

[SYDNEY] Australia’s banking regulator said on Wednesday it would not ease its strict home loan lending rules citing an expected rise in household debt as interest rates fall and elevated risks from an uncertain global geopolitical environment.

The Australian Prudential Regulation Authority (APRA) said the country’s lenders would still be required to assess new borrowers’ capacity to meet repayments at an interest rate of at least 3 percentage points above the current home loan rate.

“Should interest rates fall significantly further while labour markets remain robust, that has historically led to higher credit growth and leverage, higher house prices and often more risky lending, such as high debt-to-income and investor lending,” APRA Chair John Lonsdale said in a statement. REUTERS