The US banking industry may face new mortgage capital requirements under the Basel Accord regulations

PANews reported on February 16 that, according to Jinshi, as the Federal Reserve is about to announce a highly anticipated bank capital proposal related to Basel III, U.S. lending institutions may face new mortgage requirements. Michelle Bowman, the head of the Federal Reserve’s banking supervision, stated that this new measure related to residential real estate will consider increasing the “risk sensitivity” of mortgage capital requirements on bank books. One approach is to use loan-to-value ratios to determine the applicable risk weights for residential real estate risk exposures, rather than using uniform risk weights. “This change can better align capital requirements with actual risks, support bank asset-liability loans, and potentially reverse the trend of mortgage activity shifting to non-bank institutions over the past 15 years,” Bowman said.