ANZ warns low deposit first time buyers face further borrowing costs from 2016

Further changes to banks' capital requirements could increase the cost for first time buyer customers.

ANZ deputy chief executive Graham Hodges says further changes could be required after a review by the international Basel Committee on Banking Supervision.

"Proposals currently under consideration by the international Basel committee could lead to further significant changes to bank capital requirements applying to housing," Mr Hodges told a federal parliamentary inquiry into home ownership last week.

"This could have the effect of increasing the cost of finance particularly for those customers borrowing at a higher loan-to-value ratios," Fairfax Media reported.

"Over time this will likely disadvantage those buyers namely some first home buyers with smaller housing deposits."

The Australian Prudential Regulation Authority's new capital requirements for the big four banks and also Macquarie Group will require them to hold billions of dollars in extra capital against their mortgage books from July 1 next year.

Last week's comments are the first made by the bank on the matter.

“The potential consequences of the Basel IV proposals need to be carefully considered,” ANZ advised in its submission to the Murray inquiry report, which recommended regulators increase capital requirements for the banks so they are unquestionably strong globally.
 
“In the residential mortgage market, for example, the proposals may encourage authorised deposit-taking institutions to implement much greater differential pricing between customer groups than currently occurs in the Australian market, to reflect the wider spectrum of capital requirements.
 
“This may include higher pricing to customers with higher loan to value ratios.”