In his first interview since becoming APRA boss, John Lonsdale said he was open to changing bank rules on home loans if the economy deteriorated, to ensure banks don’t “choke off credit”.
Australian Prudential Regulation Authority chairman John Lonsdale says he is open to changing bank rules on home loans if the economy deteriorates, to ensure banks do not “choke off” credit and make the fall in house prices worse.
“We have built a very strong capital framework that provides a lot of buffer in the system. At the heart of it is the ‘unquestionably strong’ reforms, which we are embedding,” he said.“That has set the system up – if you look at prudential metrics right now, they look very good. We have strong capital, strong liquidity and credit standards are very good. We sail into 2023 in a good position from a system point of view, and entity point of view.
But markets now expect that after a few more cash rate rises, the Reserve Bank could start easing rates early in 2024. Any reconsideration of the serviceability buffer would show APRA is also preparing for rates to peak. The statistics show the implied buffer was 2.7 per cent in the September quarter, down from 2.9 per cent the June quarter .
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