APRA chairman Wayne Byres has discussed the regulator’s plans to rein in investor lending.
In a speech to the House of Representatives Standing Committee on Economics in Canberra on Friday, Mr Byres said APRA continues to encourage banks to reinforce sound lending standards, pointing to the recent publication of the new Prudential Practice Guide on Residential Mortgage Lending.
APRA has been discussing with other agencies on the Council of Financial Regulators what additional steps it might reasonably take to further assist sound lending practices among Australian banks, he said.
“There has been considerable media interest in this – many interpreting comments in the Reserve Bank’s Financial Stability Review as a sign that we are planning to implement the same sort of so-called macro-prudential measures introduced in other jurisdictions (such as LVR caps and loan-to-income limits),” Mr Byres said.
“We are still working through our options but, as I have said elsewhere, those sorts of tools are unlikely to be the ones we reach for first."
Mr Byres also commented on APRA’s recent stress test of the largest Australian lenders against a significant fall in house prices.
“The good news was that the lenders subject to the test remained above their minimum capital requirements even in the extreme scenario,” he said,
“The caveat to that is that we also concluded more work needs to be done to make sure that, having survived the stress, they would also make a speedy recovery and be able to continue to support their customers through difficult times.”