Australia banking watchdog tightens home loan requirements

Anil Panchal FXStreet

Early Wednesday morning in Asia, Reuters came out with the news from the Australian Prudential Regulation Authority (APRA), the Aussie banking regulator, unveiling the efforts to tame housing prices.

“Australia's banking regulator on Wednesday tightened restrictions on home lending as rapid loan growth fed surging prices and posed a risk to financial stability,” said Reuters.

Key quotes

The Australian Prudential Regulation Authority (APRA) increased the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

APRA said it told lenders it expects they will assess new borrowers' ability to meet their loan repayments at an interest rate that is at least 3.0 percentage points above the loan product rate. This compares to the current buffer of 2.5 percentage points.

FX reaction

Given the news challenging Aussie traders, AUD/USD eases below 0.7300, around 0.7290 by the press time, following the release. The pullback battles China-related news amid a quiet start to the trading day.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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