The Australian Prudential Regulation Authority (APRA) is consulting on a draft Prudential Practice Guide 223 Residential Mortgage Lending that provides guidance to authorised deposit-taking institutions (ADIs) on sound risk management practices for residential mortgage lending, including owner-occupied and investment properties.
The PPG applies to authorised deposit-taking institutions (ADIs) as well as to other APRA-regulated institutions that may have exposures to residential mortgages.
The PPG discusses:
- sound loan origination criteria
- appropriate security valuation methods
- Specific loan types including Interest-only loans, foreign currency loan, loans with non-standard/alternative documentation, reverse mortgages and Home equity lines-of-credit
- the management of hardship loans
- establishing a robust stress-testing framework and
- lenders’ mortgage insurance (LMI).