Analysts say the prudential regulator is likely to reduce so-called serviceability buffers to allow borrowers to get bigger loans as it prepares to release what will be a closely watched review of its housing market lending rules within the next fortnight.
Changing the interest rates used in loan serviceability tests could increase borrowing capacity in a higher interest rate environment. The Australian Prudential Regulation Authority has already declared it was open to adjust settings to avoid strangling credit growth in the housing market.
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James Eyers writes on banking, finance, payments, regulation and emerging technologies. Based in Sydney, he is a former legal and investment banking editor at the AFR and has been a business journalist for more than 20 years. Email James at jeyers@afr.com.au
Ayesha de Kretser is a senior reporter with The Australian Financial Review covering the aviation and tourism sectors. She has previously reported on banking, mining and commodity markets. Connect with Ayesha on Twitter. Email Ayesha at ayesha.dekretser@afr.com.au
