Government Loosens The Grip On Investment loans

APRA announced today the plan to remove the investor loan growth benchmark and replace it with more permanent measures to strengthen lending standards.

In 2014, The Australian Prudential Regulation Authority (APRA) introduced 10% benchmark on investor loan growth for banks as a temporary measure to reduce high-risk lending, which caused the increase of interest rates for investment loans among banks.

APRA is a governing body for Authorised Deposit-Taking Institutions (ADI) which are mostly the banks.

In the letter to ADI today, APRA advised that it is now prepared to remove the investor growth benchmark where the ADI is able to provide assurance on the strength of their lending standards.

So it is now up to individual lenders to determine how to grow their investor loan book at the same time to meet APRA's guidance on lending standards.

We can expect the reduction of interest rates for investment and tightening in serviceability to grab the quality investor market share.