Bank’s measures already having a positive effect on housing bubble
(1 June 2015 - Australia) The Reserve Bank of Australia (RBA) is not looking to implement the same tough property-rules as its New Zealand counterpart, instead it is looking continue its current regime in an effort to keep the housing boom in Sydney and Melbourne at bay.
RBA deputy governor Philip Lowe told the Thompson Reuters Australian Regulatory Summit that the recent actions by the Australian Prudential Regulation Authority (APRA) to review bank lending standards for property investors were already having a positive effect.
"APRA's approach is one that I think has a lot of merit.
"They have embedded in their micro-prudential supervision a macro-prudential perspective.
"They haven't got this further layer of macro-prudential tools we see in other countries, it's really bedded into their supervisory processes."
Recently Australia’s big four lenders tightened their lending guidelines for housing investors, either by making loans more expensive or tougher to get.
In December last year APRA told lenders not to increase investor loans by more than 10 percent a year.
The RBA's seasonally-adjusted measure of investor housing loan growth shows the pace slowed to an annualised rate of 10 per cent in the first three months of 2015.
Lowe said property prices were on the rise, household debt was high, and income growth had slowed, suggesting that banks were now in a more risky position.
"My subjective assessment is that the level of risk in banks' mortgage portfolios has risen over the last couple of years," he said.
"In that environment it's entirely appropriate that APRA has a very close dialogue with financial institutions ... to make sure there are plenty of buffers there in case things don't turn out so well.”
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