US Banks to See New Mortgage Capital Requirements in Basel Plan

US lenders are poised to see new mortgage-loan requirements as the Federal Reserve comes closer to unveiling a long-awaited bank capital proposal tied to Basel III.

Michelle Bowman, the Fed’s top bank cop, said parts of that new measure related to residential real estate would consider increasing the “risk sensitivity” of capital requirements for mortgage loans on bank books. One approach would be to use loan-to-value ratios to determine the applicable risk weight for residential real estate exposures, rather than applying a uniform risk weight.

“This change could better align capital requirements with actual risk, support on-balance-sheet lending by ...