APRA’s secret report unveiled various
riskshttp://www.kalkine.com.au/stockresearch/apras-secret-report-unveiled-various-risks.aspx
Tracing back history
In 2007, Australian Prudential Regulation Authority (APRA) conducted a confidential search although this report was never published.
The report studied the effect of lower lending standards practices by the banks on credit growth.
This was also to understand the ability of borrowers to service home loans given several loans made in 2006.
APRA's then-chairman, John Laker, told staff that the report could not be published because it would have panicked the investors while undermining the banks.
Some experts believe that the release of the report could have caused Australia to witness recession, increased mortgage defaults, increased unemployment, surge in borrowing costs, and pressure on the economy.
Secret report details
The secret report by the banking regulator APRA revealed that lax lending standards by Australian banks threatened to push the number of borrowers who could not pay their home loans to a record level leading to a serious recession and a banking crisis.Housing Lending Rates (Source: The Australian Economy and Financial Markets April 2016 - Reserve Bank of Australia.)
According to the modelling of the report, lower lending standards had led banks to expand credit significantly delivering 3.4 times more loans than the actual value under the prior conservative lending rules.
The model also indicates that the delinquency rates are more than those practical in the recent decade and are often told by several lending institutions to be less than ..............
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