Document ID: chunk:federal_register_of_legislation:F2022L01576:body:0:p26
Version: federal_register_of_legislation:F2022L01576
Segment Type: other
Provision Reference: 
Character Range: 70413–73271

other real estate owned
20.         Prescribed provisioning does not apply to restructured exposures, assets acquired through security enforcement and other real estate owned which meet the requirements for items to qualify as performing.

Attachment C – Macroprudential policy: credit measures
   1. This Attachment applies to credit exposures in Australia. Credit exposures in Australia are exposures where the majority of the collateral value securing the loan is located in Australia, or for unsecured loans where the ultimate risk of the exposure is located in Australia.
Definitions
  2.      For the loan types specified in paragraph 7 of this Attachment, definitions are contained in Reporting Standard ARS 223.0 Residential Mortgage Lending.
  3.      For the loan types specified in paragraph 8 of this Attachment, definitions are contained in Reporting Standard ARS 230.0 Commercial Property.
Serviceability buffer
  4.      For residential mortgage lending, an ADI must apply a buffer over a loan's interest rate to assess the serviceability of a borrower. The serviceability buffer must be applied to the interest rate on the loan to be paid by the borrower, ignoring any discounted introductory rates offered for a limited period at origination of the loan. The level of the serviceability buffer must be at least 3.0 per cent, unless determined otherwise by APRA. APRA may vary the minimum level of the buffer between 2.0 and 5.0 per cent.
Lending limits
  5.      Under paragraph 112 of this Prudential Standard, if APRA considers that there is an excessive level or growth in higher risk lending or credit activity more broadly, APRA may set limits on particular types of lending.
  6.      In considering whether there is an excessive risk being generated at a system level, APRA will have regard to, among other factors, trends in credit growth and leverage, growth in asset prices, lending conditions and ADI financial resilience.
  7.      For residential mortgage lending, an ADI must ensure that it has the ability to limit the extent of lending in the following loan types:
    (a)   lending with a debt-to-income ratio greater than or equal to four times or six times;
    (b)   lending with a loan-to-valuation ratio greater than or equal to 80 per cent or 90 per cent;
    (c)   lending for the purposes of investment;
    (d)   lending on an interest-only basis; and
    (e)   lending with a combination of any two of the types specified in (a) to (d).
  8.      For commercial property lending, an ADI must ensure that it has the ability to limit the extent of lending in the following loan types:
    (a)   lending for land acquisition, development and construction; and
    (b)   lending for the purposes of investment.
  9.      APRA will notify ADIs of any decision to set a limit on particular types of lending at least one