APRA uncomfortable with housing 'exuberance'

by Adam Smith18 Sep 2013
A surging housing market could be severely undercut if lenders lower their credit standards to woo consumers.
RP Data head of corporate affairs Craig Mackenzie has told Australian Broker that regulators will be keeping a close eye on any erosion of credit standards as interest rates remain low. Mackenzie pointed to last week's APRA Insights release, wherein the banking regulator warned that low interest rate environments could lead to rising household leverage. In spite of this, APRA said credit growth remains sluggish, and warned banks not to relax their standards to spur demand.
"This article was a very public statement by APRA to the market and regulated institutions that they are keeping a close eye on ADIs to ensure they do not inappropriately relax lending standards so as to counter this slow credit growth environment.  APRA typically communicates this message to ADIs behind closed doors," Mackenzie said.
With lenders ramping up competition for home loans and the housing market beginning to heat up, Mackenzie argued that APRA will be particularly vigilant.
"There is no doubt that APRA will, in the coming months, keep a close eye on overall credit growth and the level and composition of new lending activity at each ADI, so as to ensure that sound lending practices are maintained and that Australia does not produce a credit fuelled housing bubble.  It seems a logical conclusion to draw from the article that there currently exists a level of exuberance in the residential lending market that APRA is not entirely comfortable with at present," he said.


  • by ?? 18/09/2013 9:23:33 AM

    If there is a bubble, it's only in certain states. Others are quite slow. Relax Lending standards?? Nothing has got easier with regard to rules of Banks, and we're still using affordability rates in the 7-8% range. Plus the lack of building activity is holding back the economy.
    So government bodies want the economy to pick up, concerned about the lack of homes being built; with the solution to make credit hard to get (which will stop homes being built).

  • by Garry 18/09/2013 9:26:47 AM

    How about these govenment departments mind their own business. Banks have been around a lot longer than these so called "experts" at APRA and the like. I'm positive they know what they are doing as the banks have survived though all manner of financial storms. This is just another person trying to big note himself. If APRA want to make the rules then they should lend money. At the moment as I see it is that its the banks money so it should be the banks rules - and not APRA.

  • by Regional Broker 18/09/2013 10:00:53 AM

    Nothing I have experienced in the last 6 month indicates that there is a lowering of the credit standards , quite the contrary , they are still prudent .
    APRA need to realise the Australian Banking system has withstood the GFC , The late 80"s and early 90's property crisis and so on they are without a doubt the best in the world , take the eyes off as they are not the overseas banks we seek doing rash and crazy things quite the opposite.