Former Australian Securities and Investments Commission chairman Greg Medcraft says the prudential regulator must “fine-tune” its use of a serviceability buffer in the mortgage market, suggesting the hurdle rate could be linked to the cash rate and automatically fall as official rates rise.
The Australian Prudential Regulation Authority has currently set the buffer at 3 per cent – meaning new home loan borrowers, or those looking to refinance, are currently being assessed at their ability to repay an interest rate of around 9 per cent.
Loading...
Campbell Kwan covers commercial and residential real estate for The Australian Financial Review, based in the Sydney newsroom. He was previously the breaking news reporter. Email Campbell at campbell.kwan@afr.com
James Eyers writes on banking, payments and fintech. He is a former legal and investment banking editor at the AFR, has degrees in commerce and law from UNSW, and is co-author of Buy now, pay later: The extraordinary story of Afterpay Connect with James on Twitter. Email James at jeyers@afr.com.au
