Why it matters: APRA has unveiled its strategic and enforcement priorities for the next year.
As part of that, it has signalled that mortgage stress is most acute in non-bank borrowers.
But it reassured non-performing lows were still at very low levels.
APRA will also do a cross-industry stress test to ensure the system can withstand a Credit Suisse-like shock.
Borrowers with a mortgage at a non-bank lender are more stressed than those with major banks and regulators will step in if they pose a “broader systemic risk” to the financial system, the prudential watchdog says.
Australian Prudential Regulation Authority chairman John Lonsdale said a tick-up in loan arrears at non-bank lenders had caught the watchdog’s eye, as he promised a broad-based review of the financial sector to make sure it could withstand a Silicon Valley Bank or Credit Suisse-like collapse.
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Lucas Baird is a journalist based in The Australian Financial Review's Sydney office. Connect with Lucas on Twitter. Email Lucas at lucas.baird@afr.com
