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The higher of the following rates:  7.25% p.a.  SVR plus 2.25% less any concession* e.g. MAV Package granted to the borrower  5 Year Fixed Rate at time of application less any concession* e.g. MAV Package granted to the borrower

1. No mate - it means that they'll assess CBA debt at 7.25% P/I. The way they did it before meant that it often fell below this. 2. OFI debt yep - not the biggest change, just add 20%.

Yikes!!! Haha. This is OK - 20% loading from where they are isn't too bad (means like last 3-4 rate cuts haven't done much for serviceability, but not as big of a change as some of the others). Cheers, Redom

Interesting article, thanks for posting - i think his partly right as to possible next steps. IMF are in town this week/month i believe and will report within a few months, i strongly suspect they'll come out with a pretty headline worthy report stating that we're in bubble territory in...

Haha well in policymaking terms we used the term to mean banks that aren't under the same oversight levels as the main banks that are prudentially regulated. Loan sharks do fall into that bucket. In terms of higher rates, it should be noted the rates are still very much residential rates...

Yep, one of the indirect consequences of targeting the main banking sector is that it will see investor lending move towards the 'shadow' banking sector. They'll see a big spike in their investment business i think as deals get pushed to them that'd previously had gone to Macq, NAB, Adelaide...

To calculate your borrowing power lenders assess your income and then subtract your 'assessed' expenses to work out your overall borrowing power. AMP, MACQ, NAB previously assessed the debts you held with other institutions (say your CBA mortgage) at the actual repayment you paid monthly...

Hmm interesting perspective - i'm not sure i agree. Property prices aren't all that great for the economy. Property prices increasing doesn't lead to all that much for the economy. There are indirect effects: 1. Wealth effect promotes some consumption = good thing. Property...

Great post, as always Euro. Very insightful info there. This (tightening lending policy) was all coming and the warning signs have been around for a while. APRA have a huge stick they can swing at their pleasure and the lenders will dance to their tune. The signals were well communicated...

I agree mate. Putting my regulator hat back on, regulators actually modelled out a gameplan for what we could do to be implemented post Q1 2015 if the data indicated that lending conditions were indicating a deterioration in financial system stability (lending growth metrics, etc etc)...

Broadly agree - although there will be some that have I/O periods expire with more troubles renewing them. That may increase the supply a little.

Definitely - if everyone moves to actual payments, lenders don't compete on serviceability so much and there'll be fewer players with calculators to capture the multi-property investor market. Price may play a bigger role too if lenders can't compete on the above.

Just for foreigners at 70% LVR, down from 80%. They also cut LVRs for Aussie non residents (expats) down to 80%. Can still get normal resi IP LVRs for Aussie's.

Not that i've noted yet ej89. I don't think MEDICOs or First home buyers are areas of specific concern to APRA though.

Brilliant DaveM - thanks for sharing. Very alarming words for investors from the APRA chief. They've done modelling on the assessment rates used for OFI debt - which is where the real serviceability impact lies. Byres words: "I confess to struggling to see the logic of such an...

I could be wrong, but I'd be surprised if this changed as a result of APRA intervention - doesn't seem to align with specific risks identified.

Euro, brilliant stuff. Very useful info there. From a business standpoint, if they want to smash through walls in the third party channel they've got the product offering to match. Particularly in a climate where some of their niche competitors (actual repayment lenders) are moving elsewhere...

Euro, great post as always. A few things have changed though. Macquarie no longer take actuals on their own debt. No public policy announcement change, but i've heard it via my BDM at Macquarie earlier this week. 7.00% assessment rate (P&I). No more refreshing after 6 months. This was...

Anyone recall what happened in 2002-04 with regards to lending market policy? Pretty sure it was an investor boom with very fast price growth. I believe the regulators have talked about their experience in cooling a boom, citing this period. It was coupled with a few rate rises so that...

This would surprise me. We don't have a high LVR problem with the proportion of 90%+ loans relatively low. In the regulators eyes, we have a problem with a disproportionately high level of investor activity, likely to be fuelled by exuberance, and the non amortisation of loans. What...