APRA APG 223: Residential Mortgage Lending Practice Guide

Prudential practice guides (PPGs) provide guidance on APRA’s view of sound practice in particular areas. PPGs frequently discuss legal requirements from legislation, regulations or APRA’s prudential standards, but do not themselves create enforceable requirements.

This PPG aims to outline prudent practices in the management of risks arising from lending secured by mortgages over residential properties, including owner-occupied and investment properties. It applies to authorised deposit-taking institutions (ADIs) as well as to otherAPRA-regulated institutions that may have exposures to residential mortgages. It should be read in conjunction with prudential standards for ADIs, including:

• Prudential Standard APS 220 Credit Quality (APS 220);
• Prudential Standard CPS 220 Risk Management (CPS 220);
• Prudential Practice Guide CPG 220 Risk Management (CPG 220); and
• Prudential Standard CPS 510 Governance (CPS 510).

Subject to meeting APRA’s prudential requirements, and legislative and regulatory requirements governing consumer lending by ADIs and third parties acting on their behalf, an APRA-regulated institution has the flexibility to manage residential mortgage lending in a manner that is best suited to achieving its business objectives. Not all of the practices
outlined in this PPG will be relevant for every institution and some aspects may vary depending upon the size, complexity and risk profile of the institution.