20 July 2012 7:00am

The incremental cost of a home loan thanks to the higher capital requirements and other reforms of Basel 3 will be only four basis points according to APRA.

Charles Littrell, executive general manager for policy at APRA said suggestions from some bankers that the rise in the cost of a home loan due to the forms of 25 per cent were not realistic.

Littrell argued that investors and financial markets were as responsible for any pressure on banks to lift their target rates of returns as governments.

"I was a banker for twenty years and it’s often very much easier to say to...