APRA chairman Wayne Byres has emphasised the prudential regulator’s concern over residential lending.
Appearing before the House of Representatives Standing Committee on Economics in Canberra on Friday, Mr Byres said APRA is ready to take further action against lenders if needed.
“I would like to emphasise that, in alerting ADIs to our concerns in this area, we are seeking to ensure emerging risks and imbalances do not get out of hand,” Mr Byers said.
“We are not targeting house price levels – as I have said elsewhere, that is beyond our mandate – and we are not at this point asking banks to materially reduce their lending.
“We have identified some areas where we have set benchmarks that we think will be useful indicators of where risk could be building, and in doing so will help reinforce sound lending practises among all ADIs.
Mr Byres confirmed that the regulator was assessing the plans and practises of individual ADIs and would consider whether supervisory action is needed over coming months.
APRA’s discussions with major lenders have suggested that they recognise it is in everyone's interests for sound lending standards to be maintained, Mr Byres said.
“But we shall see – we are ready to take further action if needed.”
APRA supervisors are yet to decide if additional supervisory action, such as higher capital requirements, might be warranted.