house-yes-no-cross-suitable-help-guide-wrong-right-property-house-building-good-badMorningstar has outlined the likely action APRA will take to curb investor lending after the impact of its initial efforts to cool the market appear to be fading.


In a research report on Commonwealth Bank of Australia (CBA) late last week, Morningstar analyst David Ellis explored the potential impact of further regulatory action on Australia’s largest mortgage provider.

Morningstar warned that APRA could raise the minimum serviceability buffer


“Increasing concerns of an overheating housing market are likely to prompt the Australian Prudential Regulation Authority, or APRA, to act to slow the rate of growth of residential investor home loans,” Mr Ellis warned.

Morningstar warned that APRA could raise the minimum serviceability buffer “to 3 per cent from 2 per cent” and lift the risk-weighted capital floor for new residential investor borrowers holding multiple properties to 75-100 per cent.

The report noted that CBA applied the “higher rate” of 2.25 per cent above the current customer rate (or 7.25 per cent) for new mortgage applications to determine serviceability.

While APRA does not publicly disclose individual bank capital requirements, Mr Ellis said the regulator could impose tougher measures on individual banks if investor lending grows at levels considered “too risky”.

We expect tighter residential criteria for investor lending across the lending industry despite the banks opinion or lending appetite.  

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