(15 April 2010 – Australia) The Reserve Bank of Australia has said that an improving economy will see non-bank lenders return to the market, however as a result lending standards could become more relaxed.The Reserve Bank’s assistant governor, Guy Debelle, told a Senate committee in Sydney earlier this week that despite lending activity in the market still being less than years before the GFC, opportunities were beginning to emerge for smaller players.
Dr Debelle said he suspects that the sector will start to pick up as the economy improves and would think competition would become increased.
Dr Debelle indicated that there was ‘a reasonable chance’ that lending standards would become more relaxed if the economic outlook continues to improve.
RBA is not trying to force down demand by steadily lifting the cash rate, Mr Debelle commented when discussing the current cash rate.
The government is not trying to depress demand, it is trying to make the economy grow at a sustainable pace, the assistant governor added.
Dr Debelle said the RBS was trying to ensure that lending grows at a sustainable pace which has, in the past, proven to be the best for the economy as a whole.