APRA Takes Steps to Keep Mortgages in Check

June 06, 2017
Maureen Johnson



APRA Influences Lenders

The Australian Prudential Regulation Authority (APRA) was established on July 1 1998 to oversee banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies, and most of the superannuation industry. It was founded largely by the industries under its supervision and as of June 2016 it acts as a watchdog for institutions holding $5.9trillion in assets for depositors, policy holders and super fund members.

Its most recent crack down on interest only loans has resulted in the establishment of ‘speed bumps’ governing most lenders in an attempt to slow Australian borrowers’ race to secure interest only repayments on their home loan debt.

 APRA has therefore told the banks that less than 30 per cent of new mortgages can be "interest only", which is substantially below the last reported figure of 38 per cent of total loans. In fact, the percentage of interest-only loans has not been below 30 per cent since 2008.

In response ING DIRECT has announced that any customers wishing to access owner-occupied fixed rates will need to request principal and interest (P&I) repayments.

According to an article in today’s Mortgage Business by Blogger Annie Kane ING DIRECT has announced that customers who want a fixed rate for an owner occupied property will have to make principal and interest repayments. The lender will also be reducing owner-occupied rates on three and five-year fixed rate loans (combined with Orange Advantage) to 3.79 per cent per annum (p.a.) and 4.19 per cent p.a, respectively (4.48 p.a. and 4.51 p.a. comparison).

Standard owner-occupied three and five-year fixed rates will also be reduced to 3.89 p.a. and 4.29 p.a., respectively (4.51 p.a. and 4.56 p.a. comparison). 

However, ING announced that it would be increasing its three-year investment fixed rate to 4.39 per cent (4.82 p.a. comparison).

According to Kane, as well as announcing the changes that are effective from today, ING DIRECT also said that its rates for all owner-occupiers making interest-only repayment will increase by 0.15 per cent from 23 June 2017.

 For more information about ING and other lenders call Peter or Emma on 9521 1611

Posted in: Home loans

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