Special rules for big banks have given them a $19 billion advantage over their smaller rivals.

APRA says the fact that the major lenders are still able to self-calculate the riskiness of their home loans is a huge advantage.

A new regulatory framework requires the CBA, NAB, Westpac and ANZ  to hold larger top tier capital buffers, basing their regulatory capital on a blanket of at least 25 per cent of mortgages being at risk.

Meanwhile, smaller lenders must base their risk weightings at 39 per cent.

“That difference in risk weights directly impacts the amount of capital held for a given portfolio of loans,” APRA said in answers to questions on notice from the House of Representatives Economics Committee hearing last month.

“(This) equates to a reduction in CET1 (Common Equity Tier 1) capital requirements of approximately $19 billion, in aggregate, for the four major banks' current Australian residential mortgage portfolios,” APRA said.

The difference in capital requirements has impacts on the banks' profits and profitability, with the big four enjoying a pre-tax funding cost advantage of around 14 basis points, though this was closer to 11 basis points when a marginally higher capital requirement for being defined as domestic-systemically important banks was factored.

APRA is tightening the rules, with chairman Wayne Byres telling a Financial Services Institute function last week that increasing risk weights from around 16 per cent to 25 per cent would be the first step.

Mr Byres says 2017 will be “a year of consultation” over the next steps in the FSI and the implementation of new global regulatory requirements.

“Even if that is the case, they would not take effect until at least a year after that,” Mr Byres said.

“Capital accumulation remains the appropriate course for most ADIs, but with sensible capital planning the actual implementation of any changes should be able to be managed in an orderly fashion.”