The Australian Prudential Regulatory Authority’s lending restrictions are being circumvented by some of the major banks amid a race for market share, The Australian Financial Review reports.
The report alleges that APRA’s stress testing guideline – which urges banks to ensure new borrowers can afford to repay the loans on all their properties should rates climb to 7 per cent – is not being properly adhered to, noting a confidential National Australia Bank mortgage calculator does not apply such a rate to existing real estate investments of those seeking new mortgages.
"We know that some of our competitors are not applying APRA's minimum 7 per cent interest rate servicing assumption to all borrowers' debts because we are losing customers due to their much more generous borrowing capacity limits," a chief financial officer at a second-tier bank told the AFR.
A NAB spokesperson informed the paper that the bank had been working with APRA to meet the regulator’s new requirements and the bank rejected claims it was trying to work around the guidelines as “factually incorrect”.