The headline is my quick take on the matter, here is the news

APRA

  • proposes removing guidance on using 7% interest rate to assess mortgage affordability
  • proposes ADIs serviceability assessments incorporate an interest rate buffer of 2.5 per cent
  • proposes banks would be permitted to review, set own minimum interest rate floor for use in serviceability assessments
  • says prudent lenders should use rates comfortably above the minima
  • Current Australian interest rate environment does not warrant uniform mandatd rate floor of 7%
  • Changes likely to increase the maximum borrowing capacity for a given borrower

The juice is on the loose.

APRA says there will be a 4 week review process.

This will have the impact of boosting the housing market.

It reduces the likelihood of a near term RBA rate cut too.