The Australian Prudential Regulation Authority (APRA) is set to keep its macroprudential policy settings steady after a review of domestic and international financial conditions and risks, according to a statement on Thursday.
The regulator confirmed that the mortgage serviceability buffer will remain at 3 percentage points and that the countercyclical capital buffer will remain at 1% of risk-weighted assets.
It also said that the high debt-to-income lending limits will remain unchanged, allowing banks to lend up to 20% of new owner-occupied and investment loans at debt-to-income ratios greater than or equal to six times.
APRA noted that while households remain highly indebted, there are signs of moderation in housing prices and credit growth. Business credit growth remains above its historical average. The pressure on household and business cash flows has increased due to higher inflation and interest rates, but nonperforming loans remain low.
"The banking system remains well-capitalized and resilient and is well-positioned to absorb shocks should economic conditions deteriorate significantly," the regulator said.
The watchdog said that high debt-to-income ratio lending remains well below its limits, citing preliminary March quarter data and concluding that the limits are not restricting overall bank lending.