APRA chairman, Wayne Byres, says the regulator is ready to lift the 10 per cent cap on growth in investor lending, because mortgage lending standards have improved.

He told the Senate Economic Legislation Committee in Canberra yesterday that the cap is "probably reaching the end of its useful life".

The cap has led banks to raise borrowing rates for investors, so its removal could see investor lending rates fall.

The Productivity Commission has criticised the cap for restricting competition in the mortgage sector.

Byres said the other restriction imposed by APRA - the 30 per cent cap on new interest-only loans - is likely to stay in place.

The interest-only cap was imposed in March 2017, whereas the investor lending cap has been in place for longer, since December 2014, according to The Australian Financial Review.

Click here to read Wayne Byres' opening statement to the Senate Economics Legislation Committee.

Read more about APRA's restrictions on lending:

Loyal bank customers exploited: Productivity Commission draft report

Banks look inward to improve credit quality

Interest-only loans at record lows