Budget to hit non-banks serviceability calculators
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Budget to hit non-banks serviceability calculators

  • Posted by: Kate Haddad

Budget to hit non-banks serviceability calculators

09 May 2017

First posted on Propertychat.com.au

Behind the media noise and ho-ha about housing affordability, this budget will have some interesting future financing implications for property investors.

 APRA are going to get:

  1. Power to regulate non ADI’s to meet their prudential practice guide.

What this means is non-bank lenders that determine their own serviceability metrics will slowly fall into line with APRA guidance. Hello Liberty.

Simply shifting risk to the shadow banking sector isn’t ideal for financial stability, so now they’ll have the power to address this risk and govern the non ADI lenders.

Legislation will need to pass first, but i’m sure there’ll be no roadblocks to something like this. Typical process is it takes a month or two to draft it up and get it through at next available sitting session thereafter. Non banks may move in anticipation though.

  1. Power to implement geographic based controls.

There must be some legislative power technicality that restricts APRA from implementing geographic based control.

 This does raise questions.

APRA’s clearly asked for these increased powers. I suspect their game planning Sydney and Melbourne specific controls (similar to NZ) and need legislative changes to be able to do what they may do.

What does this mean?

  • APRA have game planned future measures that they can implement if required. Here’s the signal at what they’re looking to do. I suspect if it keeps steam rolling ahead geographic controls will be next (e.g. LVR cap for Sydney/Melbourne postcodes).
  • And over leveraged property investors, solutions will close in time. If you plan on going here to continue your investing, tick tock.

Have dug out the measures for those that are interested. See below:

Australian Prudential Authority - Modernising Powers to Address Systemic Risks

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