APRA warns again on 10% investment loan limit

From The Australian:

Speaking to a Senate committee in Canberra last night, [Wayne Byers] said most banks were already compliant with guidelines on investor lending growth and borrowing serviceability tests, so credit growth would unlikely be impacted.

While the guidelines were not “hard limits”, Mr Byres signalled APRA’s “targeted” review would not hold back against specific lenders deemed to be behaving too riskily.

“The guidance is not intended to be dismissed lightly, and any recipients of subsequent supervisory action have no right to claim they weren’t warned,” he told senators.

That looks to be firming as a hard limit to me. Watch out Mac Bank and NAB, both growing above 10%, the former wildly so.

David Llewellyn-Smith
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  1. reusachtigeMEMBER

    LOLOLOLOLOLOLOLOLOLOLOL!! They better start writing hard hitting letters soon! “Please don’t do that, thank you, otherwise we’ll be bringing out the lettuce”

  2. Do we know what the actual sanctions are for breaching the limit ?
    I still find it hard to believe anything will happen. Our banana republic does not allow for the state to intervene in corporate malfeasance.

    • Under Pillar II supervisory powers, APRA has the ability to impose quite severe capital penalties over any ADI that breaches its guidelines and they believe are writing overly risky lending. However, we’ll never know as APRA do not disclose Pillar II capital requirements.

      But yes about limits of 10% growth on investor lending is head in the clouds stuff

  3. There is a world of difference between a regulatory requirement (for which penalties can apply for the breach of…) and a ‘guideline’ ……which suggests that it is ‘in your best interests not to over extend yourself’…….nothing different there…………

      • HnH, haven’t you been saying so over entire 2014? In the meantime in the real world, …. well, you know the rest.

        EDIT: seriously, where do you get this optimism? I do admire it.

    • @Stomper

      you missed this : Buy-to-let borrowers will also be exempt from the income restrictions.

      rules are only for poor people (FHBs) who don’t need the rules, all the greedy speculators are left almost undisturbed

      • while I’m sure all on this site would love to see you right, be careful not to back yourself too hard by backing APRA

        they are as weak as p!ss, and this form of ‘macroprudential’ is laughable. Warming up to what exactly? At best a slap on the wrist for allowing investor mortgages to grow by *only* 10% a year?

        Lets see… 10% a year for every bank, building society and credit union, and still unlimited capacity for every non bank lender funded by securitisation (Pepper and that crowd)… hmmmmmm still seems like a shedload of funding can still go into investor mortgages.

        So bring on your wet lettuce APRA, try as hard as you can. Even if you do ‘enforce’, it won’t make a lick of difference

        Wayne Bryers might as well be Chairman of FIRB.

    • Now now, they are monitoring just as they said they would. Don’t expect regulation from the regulator.

  4. so APRA thinks 10% nominal annual growth at the time when income is growing at 2% is prudent and sustainable?

    with that growth credit doubles in real terms in less than 8 years, in 30 years it increases 15 times

    with APRA’s prudent landing rules property investment credit will overgrow our GDP in just a few years, in couple of decades interest payments on investment property credit will surpass our GDP

    • Agreed, this regulation is a joke. The nation is heading towards a fiscal brick wall and APRA are fiddling with the accelerator pedal.