HomeView 2015 Media ReleasesAPRA move on capital good news for home buyers

APRA is to be congratulated on its announcement today about strengthening the capital adequacy of the major banks’ home loan portfolios.

APRA is to be congratulated on its announcement today about strengthening the capital adequacy of the major banks’ home loan portfolios.

“This is a positive response to an important pro-competitive recommendation of the Financial System Inquiry (FSI),” said COBA CEO Mark Degotardi.

“APRA’s decision on capital requirements for residential mortgages brings us closer to a level playing field in prudential regulation of the home loan market.

“The FSI found that the current capital settings are giving the major banks a funding cost advantage and distorting the market.

“APRA’s move will allow customer owned banking institutions to maintain sustainable competitive pressure on the major banks. This is good news for home buyers.

“Reducing this competitive distortion will promote a vibrant, diverse home loan market.

“If the major banks seek to increase home loan interest rates in response to APRA’s new, fairer capital settings, customer-owned banking institutions look forward to taking market share from the major banks.

“APRA’s website lists well over 100 banking institutions that are not affected by the capital reforms, including regional banks and foreign banks as well as customer-owned banks, building societies and credit unions.

“At 25%, APRA has targeted the lower end of the 25-30% range recommended by the FSI for the average mortgage risk weight but APRA describes it as an ‘interim’ measure that will be subject to further consideration.

“APRA and other regulators must be ready to act to promote competition and to be vigilant about the FSI’s warning about the risk to competition of the ‘high concentration and increasing vertical integration of some parts of the Australian financial system’,” Mr Degotardi said.

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Customer Owned Banking Association is the industry body for credit unions, building societies, mutual banks and friendly societies.  See coba3.nexusone.com.au

Media Release

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Media Contacts

Mick Gibb
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 423 149 494
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