APRA keeps macroprudential settings unchanged

The news: The Australian Prudential Regulation Authority has outlined its reasons for keeping current macroprudential policy settings — including the mortgage serviceability buffer — in place, but says things could change quickly.

The numbers: The countercyclical buffer will remain at 1% of risk-weighted assets to ensure banks have extra breathing room in times of stress. The mortgage serviceability buffer will remain at 3% to underscore prudential lending. No limits on capital distribution or lending have been applied.

The context: APRA said it took its decision against a backdrop of cost-of-living pressures, easing labour market conditions, higher borrowing costs and the domestic and global outlook. The current mortgage serviceability buffer had improved the quality of lending, APRA said, and arrears rates and non-performing loans had only increased marginally and remained low.

What they said: "While we believe these settings remain the right ones for the current environment, circumstances can sometimes change rapidly, especially during this current period of domestic and global economic uncertainty and geopolitical tensions," APRA chair John Lonsdale said in a statement.