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Coalition members have called for a rethink of APRA lending regulations, including stress tests which ensure borrowers can afford to continue making repayments following a 3 per cent interest rate hike.
Australia’s strict lending regulations will mean that only the wealthy can access lending, several Coalition MPs have claimed.
It includes the Australian Prudential Regulation Authority’s (APRA) mortgage serviceability test, which applies a 3 per cent buffer to ensure that mortgagees can still afford repayments amid potentially higher interest rates.
Liberal Member for Menzies, Keith Wolahan, said that APRA’s 3 per cent buffer was too high, as Australians continue to grapple with high interest rates.
“The buffer should reflect both risk and home ownership. APRA must take the interest rate cycle into account for a fairer approach,” the Liberal member told the AFR.
The concerns were raised as the Senate voted to launch an inquiry to examine the impact of financial regulation on home ownership in August.
The inquiry is hoped to support first home buyers by scrutinising lending practices, covering deregulation and barriers to finance such as tertiary education repayments.
The inquiry will be conducted by the Senate economics references committee.
Shadow treasurer Angus Taylor expressed that the Coalition will consider the findings of the inquiry, ensuring that access to capital does not become too restrictive.
“An Australia that is under-banked, under-advised and under-insured is not a recipe for a productive economy. We cannot allow access to home ownership and financial services to become a privilege only the rich can afford,” Taylor told the AFR.
“The Coalition will consider sensible proposals to ensure proportionate prudential regulation that secures our financial stability while boosting consumer outcomes to support home ownership, small business finance, and more affordable insurance.”
Following the launch of the inquiry, head of the Senate economics references committee and shadow assistant minister for home ownership Senator Andrew Bragg said the inquiry was critical for the Australian dream.
According to media reports, Taylor confirmed that the Coalition has made no commitment to removing APRA’s buffer, but is awaiting the result of the inquiry.
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