From APRA’s new residential mortgage lending reporting requirements for authorised deposit-taking institutions today:
ARF 320.8 was introduced in 2008 and has not been updated since then. There is now a significant gap in APRA’s ability to monitor the credit risk and lending practices of ADIs. Only 31 of the 109 locally incorporated ADIs are required to submit ARF 320.8. Many of the loan characteristics that are factors for assessing credit risk (as outlined in APG 223) are not covered, such as portfolio loan-to-valuation ratio LVR breakdowns, loan performance, security type and borrower serviceability. ADIs report loans only on a domestic books basis and exclude certain types of borrowers under ARS 320.8, such as non-resident households, household trusts and self-managed superannuation funds (SMSFs), meaning some relevant lending activity is not captured. Furthermore, some of the data items reported on ARF 320.8 are no longer relevant to APRA’s supervisory needs.
These information gaps in the D2A reporting mean APRA must request additional information on residential mortgage lending to undertake meaningful analysis for individual ADIs and the ADI industry as a whole. The additional data received are not subject to APRA’s formal data quality assurance processes, they are not stored in APRA’s centralised data warehouse and may not be of publishable quality.
LVR macroprudential tools are long overdue. The RBNZ is already far down this path. Still, there’s all kinds of new data here that could be used to tighten selectively…
