APRA has ‘opened a can of worms’, says economist

A leading economist has questioned the investor lending crackdown in light of the Reserve Bank’s recent shock over a $50 billion home loan error.

Domain Group senior economist Andrew Wilson said the regulatory crackdown on investor lending needs to be questioned if the integrity of the data it was based on is now being scrutinised.

“The RBA recently found $50 billion in unaccounted-for investor lending, which really does create a lot of head scratching,” he said.

“If we have to question the integrity of the data, really, doesn’t that question the whole nature of the policy as it has been introduced? We are not just looking at the outcomes of the macroprudential policy, but the nature of the recording of the particular data."

Dr Wilson’s comments come after the RBA expressed its concern over data problems that have emerged as lenders split investor loans from owner-occupied loans.

“It is a can of worms that has been opened. It’s not just questioning the need for a model in the first place, but it is now questioning the foundation of the model itself, and whether the outcomes are measurable in terms of rigour,” he said.

RBA deputy governor Philip Lowe said earlier this month that these data problems have emerged as lenders have taken a closer look at their housing loans following increased supervisory scrutiny.

“As lenders have looked more closely, what they have found has surprised and, to some extent, concerned us,” he said.

Next year APRA, the RBA and the Australian Bureau of Statistics will undertake a thorough review of the home loan data collected from Australian banks.

[LinkedIn: Has the investor crackdown affected your sales volumes?]

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