Regulator announces 20% cap on share of new lending banks can do on mortgages worth more than six times borrower’s income
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A crackdown on risky lending will limit banks’ capacity to extend large mortgages, as the financial regulator launches a pre-emptive strike against the growing excesses of an overheated property market.
The Australian Prudential Regulation Authority announced a 20% cap on the share of new lending banks can do at a debt-to-income ratio above six – a mortgage worth more than six times the borrower’s income. While Jim Chalmers said the move would “help with financial resilience and housing affordability”, the Greens immediately criticised it as insufficient.