APRA's home loan rule relaxation will allow for bigger mortgages
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It will now be easier for Australia's prospective home buyers to take out bigger mortgages.
That is because the prudential regulator has decided to relax stringent lending restrictions on banks and other financial institutions.
Effective immediately, banks no longer need to apply a "stress test" to see whether their customers can afford, at least, a 7 per cent interest rate on their residential home loan repayments.
Under the new standards, implemented by the Australian Prudential Regulation Authority (APRA) on Friday, banks will have the freedom to set their own serviceability buffers.