Australia watchdog sticks to 3% lending rule

The Australian Prudential Regulation Authority (APRA) has announced that it will maintain its current macroprudential policy settings, including the three per cent serviceability buffer for home loans.

APRA cited concerns about high household debt levels, persistent cost-of-living pressures, a pickup in credit growth, and a potential weakening job market as key factors influencing its decision.

However, concerns remain about potential shocks to household incomes due to a slowing labour market and global economic uncertainty, including geopolitical instability, as per a statement from APRA on Monday.

APRA also confirmed that the countercyclical capital buffer will remain at 1.0 per cent of risk-weighted assets. This additional capital requirement ensures that banks are well-capitalised to withstand economic shocks and maintain financial stability.

Attribution: The Australian Prudential Regulation Authority report

Subediting: M. S. Salama