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APRA publishes FAQ on the prudential treatment of residential mortgage loans issued under the Family Home Guarantee and First Home Loan Deposit Scheme

Monday 28 June 2021

The Australian Prudential Regulation Authority (APRA) has published a frequently asked question (FAQ) for authorised deposit-taking institutions (ADIs) on the treatment of loans issued under the Federal Government’s Family Home Guarantee (FHG) and First Home Loan Deposit Scheme (FHLDS) programs. 

The FAQ clarifies the regulatory capital requirements for residential mortgage loans issued under both the FHG and FHLDS for ADIs that use the standardised and internal ratings-based approach to credit risk. 

The FAQ also clarifies the correct reporting approach for entities that use the standardised approach to credit risk under Reporting Standard ARS 112.1 Standardised Credit Risk – On Balance Sheet Assets and Reporting Standard ARS 223.0 Residential Mortgage Lending.

The FAQ is available on the APRA website at: Calculation of credit risk weighted assets - frequently asked questions.

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The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $7.7 trillion in assets for Australian depositors, policyholders and superannuation fund members.