In this episode of Wealth Coffee Chats, senior mortgage broker Sarah Shome unpacks a quiet regulatory shift that could completely transform the Australian lending landscape. For decades, the big four banks have held an invisible advantage through their “internal risk-based” (IRB) capital models—supercomputers that let them hold less cash in reserve and undercut smaller lenders. But with APRA now opening the door for more banks to access this same approach, the playing field is set to level out. Sarah breaks down the jargon—like RWA, PD, LGD, and EAD—into simple terms, explaining how this technical change could lower interest rates, increase competition, and create fairer access to credit for homeowners and small businesses alike. Tune in to discover how these behind-the-scenes banking reforms could soon affect your next refinance and why your broker may soon have more options than ever.
Episode Highlights:
- The hidden superpower that’s given big banks an edge for decades.
- What “risk-weighted assets” (RWA) really mean and why they matter.
- How APRA’s new rules could level the playing field for smaller lenders.
- A breakdown of the IRB model—PD, LGD, and EAD explained.
- Why this change could bring downward pressure on mortgage rates.
- The potential for more tailored, profession-based lending deals.
- How small businesses could benefit from fairer access to credit.
- Sarah’s tips on what to ask your bank or broker as the mortgage wars begin.
