Australia: APRA to regulate non-bank lenders

In addition to having oversight over Authorised Deposit Taking Institutions (ADIs), the Australian Prudential Regulation Authority (APRA) has had its powers extended to also regulate non-bank lenders in the Australian mortgage market, who up until now have been regulated by ASIC. Whilst it is highly unlikely that non-bank lenders will have to hold capital against their mortgage lending (given they are not ADIs), APRA may look to set limits on specific types of lending it deems risky. In recent years, APRA has been putting in new measures to curb systemic risk; namely requiring ADIs to hold more capital, to ensure new investment lending does not exceed ten percent annually, and most recently to ensure that interest-only lending does not exceed thirty percent of total new residential property lending. One of the key concerns that APRA may have is the extent to which these measures has seen riskier lending flow towards the non-bank sector of the mortgage market. Hence, APRA has now been granted $2.6 million over the next four years to collect data, monitor non-bank lenders and place restrictions on lending where necessary.

"One of the key concerns that APRA may have is the extent to which these measures has seen riskier lending flow towards the non-bank sector of the mortgage market."
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