Less LMI equals higher rates

APRA has announced a reduction in the concessions in regulatory capital requirements for loans that are protected by Lenders Mortgage Insurance that are granted to financial institutions. The chief executive of insurer PMI, Ian Graham, has warned that with less incentive to use LMI, lenders would be more likely to apply higher interest rates for loans with greater risk such as low or no deposit. The changes apply to banks, credit unions and building societies.