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APRA is Set to Monitor Lenders on Regular Basis

March 23, 2016

As the lending rules are made strict by almost all the major lenders of Australia, but APRA is still monitoring the lending activities so as to maintain a balance.

It is being noticed that the regulation authority will continue to keep an eye on the lending activities being carried out the major lenders. In their latest Insights publication released last week, the regulator revealed that it had carried out a Hypothetical Borrower Exercises (HBE) during 2015, which saw it collect the serviceability assessments for four hypothetical mortgage borrowers – two owner-occupiers and two investors – used by a number of Australian lenders as 31 December 2014 and 30 September 2015.

The mortgage data was collected from the 20 lenders, and analysis was done, that shows that these 20 lenders 14 were those who increased their interest rates between 31 December 2014 and 30 September 2015. Also in the analysis, it was found that these lenders are currently using an interest rate of 7 per cent.

In the insights report, the regulator said, “Overall, debt serviceability assessments now appear to be both more prudent and more consistent across ADIs, relative to December 2014. APRA will continue to engage ADIs on this issue in 2016 to assess whether the observed improvements in sound underwriting practices are maintained,” the regulator said in the Insights report”.

APRA also said, “APRA will also be examining the extent to which loans are able to be approved outside an ADI’s own (tightened) policy parameters”.

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