APRA set to tighten mortgage risk weights?
The recent speech from APRA Chairman, Wayne Byers has provided the best indication yet that the much anticipated changes to IRB mortgage risk weights for Australian major banks are imminent, according to article in Macro Business.
With NAB recently deciding to undertake a large capital raising, partly in anticipation for these risk weights changes, investors are questioning whether the other major banks will need to follow suit.
Byers indicated that APRA has reviewed the FSI Inquiry report and confirmed it agrees with the recommendation for increases in average mortgage risk weights for IRB banks, as well as the recommendation that Australian ADIs need to be “unquestionably strong”.
However, APRA has made it clear it will determine the details of the changes and their implementation in conjunction with the anticipated global regulatory changes, commonly known as Basel 4, according to the piece.
Given the debate concerning Australia’s housing market, the Chairman was at pains to point out that APRA will be able to move ahead with mortgage risk weight changes before any other impacts from Basel 4, including the determination of an unquestionably strong benchmark.