Barrenjoey proposes mortgage risk weighting change to favour first home buyers
The investment firm's modelling has been sent to a parliamentary inquiry looking into mortgage regulations.
The prudential regulator could rebalance its risk-weighting system to give first home buyers a leg up without changing the overall capital requirement for Australian mortgages, according to new modelling by investment firm Barrenjoey.
The Coalition is considering stripping the Australian Prudential Regulation Authority (APRA) of some of its powers to regulate mortgage lending and revising credit laws as a means of helping younger Australians enter the property market.
The opposition launched a Senate inquiry into mortgage regulations in August — first reported by Capital Brief — amid concerns that banks had become too risk-averse in their property lending practices.
Chaired by the Coalition’s home ownership spokesman, Andrew Bragg, the inquiry is examining whether APRA’s mortgage serviceability test should be changed. This test assesses a borrower’s ability to afford loan repayments by assuming the cash rate is 3 percentage points higher than its current level. For instance, a borrower applying for a loan with a 6% interest rate is assessed on whether they can afford a 9% rate.
