Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

RBA keeping a lid on loans

By Staff Reporter
25 August 2014 | 1 minute read

The Reserve Bank of Australia's (RBA) Governor Glenn Stevens recently told a parliamentary economics committee that the RBA would intervene if banks lower their standards on lending.

Advertisement
Advertisement

Mr Stevens said while it is positive that banks were lending again after the global downturn, especially to small businesses, the RBA and the Australian Prudential Regulation Authority (APRA) were keeping a close eye on the finance industry. 

Mr Stevens also put speculations regarding a rate rise to rest. 

“I want to be clear though. Despite the speculation in various quarters, we have not thought about raising rates any time lately. I think that should be reasonably clear. 

“I think the next step is then to press through the supervisory mechanism for the lenders to know who they are lending to ... keep giving the message about leverage and take a close look at standards of lending,” Mr Stevens 

To ensure there is not a surge in investor loans, the RBA is keeping an open mind about using macro-prudential tools that set rules for banks on how much they are allowed to lend. 

Countries such as New Zealand and Canada have been using macro-prudential tools to ensure house prices and lending amounts are not inflated. 

“The strongest step would be the dreaded macro-prudential tool; they are the latest fad internationally. And I said that I do not rule out the use of those or asking if APRA will use them, if needed. They would remain on the table as a possibility as well,” Mr Stevens said. 

RBA keeping a lid on loans
Bank1
span class="clsMidHeader">The Reserve Bank of Australia's (RBA) Governor Glenn Stevens recently told a parliamentary economics committee that the RBA would intervene if banks lower their standards on lending.

Mr Stevens said while it is positive that banks were lending again after the global downturn, especially to small businesses, the RBA and the Australian Prudential Regulation Authority (APRA) were keeping a close eye on the finance industry. 

Mr Stevens also put speculations regarding a rate rise to rest. 

“I want to be clear though. Despite the speculation in various quarters, we have not thought about raising rates any time lately. I think that should be reasonably clear. 

“I think the next step is then to press through the supervisory mechanism for the lenders to know who they are lending to ... keep giving the message about leverage and take a close look at standards of lending,” Mr Stevens 

To ensure there is not a surge in investor loans, the RBA is keeping an open mind about using macro-prudential tools that set rules for banks on how much they are allowed to lend. 

Countries such as New Zealand and Canada have been using macro-prudential tools to ensure house prices and lending amounts are not inflated. 

“The strongest step would be the dreaded macro-prudential tool; they are the latest fad internationally. And I said that I do not rule out the use of those or asking if APRA will use them, if needed. They would remain on the table as a possibility as well,” Mr Stevens said. 

RBA keeping a lid on loans
Bank1
lawyersweekly logo

Tags:

ABOUT THE AUTHOR


Listen to other installment of the Real Estate Business Podcast
Do you have an industry update?

top suburbs

12 month growth
Travancore
49.78%
Timboon
49.57%
Dolphin Point
49.51%
Nyah West
49.42%
Preston Beach
49.29%
Newington
48.97%
Killcare Heights
48.89%
Wundowie
48.77%
Homebush
48.44%
Glenside
48.28%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.