Bank regulators may take further actions to limit home lending in an effort to mitigate risks from the booming housing market.
The statement came less than a week after the Australian Prudential Regulation Authority (APRA) introduced restrictions on interest-only loans to 30 per cent of all mortgage lendings.
In a speech in Sydney on Wednesday, APRA Chairman Warne Byres described the restriction as a “tactical response” to the growth in lending property investors, especially in the south-east Australian property market.
Byres said the rules were to ensure that banks hold bigger reserves in case of housing-related crises. The regulator would also review the lenders’ capital requirement for mortgages.
“The capital adequacy framework needs to address the concentration in housing lending that has built up in the banking system over time,” said Byres. “If we are going to put an increasing number of eggs into a single basket, we’d better make sure that basket is an unquestionably strong one.”