Mortgage pricing a pointer to bank competition 07 August 2015 4:10PM Bernard Kellerman The extent to which "banks are capable of repricing their business" in response to recent shifts in capital targets "will provide an interesting insight into the extent to which the largest banks are subject to competition," APRA chief Wayne Byres said in his opening Statement to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership. "Thus far, we have not imposed formal regulatory requirements in relation to lending practices ... [our] greater scrutiny has, however, prompted some changes to market practice as more aggressive lending has moderated," he added.Byres also gave a rule of thumb for the cost of repricing home loan risk for those banks using their own internal models to determine their capital requirements (the major banks and Macquarie Bank): "In very rough terms, the higher risk weights will require each affected bank to fund each $100 of housing loans with, on average, about $1 extra in shareholders' funds."At the same inquiry, Luci Ellis, head of the RBA's financial stability department, told the committee the RBA saw the housing sector as "one of the most interest rate sensitive parts of the economy". The degree to which the sector allowed a significant part of the transmission of the RBA Board's monetary policy decisions into the real economy therefore made the housing market highly relevant to the Reserve Bank's mandate to promote financial stability, she said.Ellis added that Australia seemed "quite unusual in that most rental housing is owned by private individuals who are not full-time professional landlords," and has so far resisted weakening lending standards to favour First Home Buyers.