Why home lending rules shouldn’t be relaxed | The Business | ABC News [Video]

While the government fended off questions about whether it commissioned a review into negative gearing, a Senate inquiry into home ownership turned its attention to the mortgage serviceability buffer, looking at whether the current setting is too stringent and is unnecessarily locking people out of homeownership. The banks at the inquiry have expressed diverging news. MST Marquee senior research analyst Brian Johnson says he thinks the setting imposed by the Australian Prudential Regulations Authority (APRA) under responsible lending laws is getting it right and should remain in place. Under the laws, banks are required to add three per cent to the current market interest rate when assessing a customer’s ability to pay off a loan. Brian Johnson says reducing the mortgage buffer to address the housing crisis actually increases demand instead of improving housing supply.
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