Authorities keeping watch on home loan risks

The prudential banking regulator has raised concerns about mortgage borrowing, although it is not looking at property prices.

APRA chairman Wayne Byres told the House of Representatives Standing Committee on Economics that the regulator is ready to take further action against lenders if needed.

“I would like to emphasise that, in alerting [banks] to our concerns in this area, we are seeking to ensure emerging risks and imbalances do not get out of hand,” Mr Byers said.

“We are not targeting house price levels – as I have said elsewhere, that is beyond our mandate – and we are not at this point asking banks to materially reduce their lending.

“We have identified some areas where we have set benchmarks that we think will be useful indicators of where risk could be building, and in doing so will help reinforce sound lending practises among all [banks].”

Mr Byres said that APRA was looking at the practices of individual banks and would consider over coming months whether supervisory action is needed.

APRA’s discussions with major lenders have suggested it recognises it is in everyone's interests for sound lending standards to be maintained, Mr Byres said.

“But we shall see – we are ready to take further action if needed.”

[Related: Is APRA’s restriction on home lending necessary?]

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