Document ID: chunk:federal_register_of_legislation:F2024L01073:front:0:p11
Version: federal_register_of_legislation:F2024L01073
Segment Type: other
Provision Reference: 
Character Range: 28000–31082

standard residential property    LMI              25          30          40          45           50     70  85
No LMI                                 65               85          105

 1.          An ADI may apply a risk weight of 35 per cent to residential property exposures that satisfy the conditions for inclusion within the Australian Government's Home Guarantee Scheme, and in respect of which the National Housing Finance and Investment Corporation has issued a guarantee certificate to the ADI. This capital treatment ceases to apply when:
         1.           the guarantee certificate expires or is released in accordance with the terms of the Deed of Guarantee in respect of the First Home Loan Deposit Scheme or the Family Home Guarantee Scheme; or
         2.           APRA determines that it no longer applies.
APRA may determine that this treatment may also be applied to a similar guarantee scheme that is offered by the Australian Government or an Australian State or Territory government.

Risk weights for non-standard residential property loans
 1.          An exposure that is secured by residential property but does not meet any of the requirements set out in paragraphs 3 to 7 of this Attachment, must be classified as a non-standard loan.
 2.          The following exposures must also be classified as non-standard loans:
         1.           interest only loans with an LVR greater than 80 per cent and an interest-only term that is specified in the loan contract as greater than five years or is of unspecified duration. The non-standard treatment applies while the loan remains on interest-only repayment terms. Exposures that meet the above criteria but are predominantly for business purposes may be excluded;
         2.           reverse mortgages, which are exposures that do not require principal-and-interest payments until termination of the facility. A risk weight of 50 per cent may only be applied to reverse mortgages where the criteria in paragraphs 3, 4, 6 and 7 of this Attachment are satisfied in addition to the LVR criteria in Table 2;
         3.           shared equity mortgages, where both the borrower and lender share in any gain or loss in the value of the mortgaged property; and
         4.           loans to self-managed superannuation funds.
 3.          An ADI must apply the risk weights in Table 2 to its non-standard loans secured by residential property, based on LVR (where applicable).

 1.              Risk weights for non-standard loans
LVR (%)                       Risk weight (%)
≤ 60                          > 60
Reverse mortgages             50               100
All other non-standard loans  100

 1.          A loan secured by residential property which does not meet the criteria set out in paragraph 5 of this Attachment, and consequently must be classified as a non-standard loan, may be reclassified as a standard loan where the loan has been performing consecutively for the previous 36 months.

Commercial property
 1.          A commercial property exposure is a property exposure that is