APRA lending crackdown ‘bearing fruit’

Appearing before the Senate Economics Legislation Committee in Canberra yesterday, Mr Byres said its objective to “reinforce sound standards in lending for housing” has consumed much of its time in recent months, with the prudential regulator only now seeing the project “starting to bear fruit”.

“Given the current environment, Australian ADIs – and particularly the largest lenders – have acknowledged the need for collective action to ensure Australian housing loan portfolios remain low risk and a key source of stability for the banking system as a whole,” Mr Byres said.

“So, with our encouragement, we've seen the removal of some lending practices which were, to be frank, less than prudent, and some scaling back in growth aspirations to more moderate levels.”

However, the APRA chair also admitted to Senators that the full effects of the changes are yet to become clear, committing to keeping a close watch on the lending sector going forward so as to assess the impact on housing markets.

The regulator added that his organisation’s success will “not be judged by changes in house prices”, reiterating that many factors influencing the market are beyond APRA’s control.

Mr Byres also paid tribute to outgoing APRA deputy chairman Ian Laughlin – a former AMP and Suncorp executive – explaining this would be his last appearance before the Senate committee.

The committee also grilled senior leaders of ASIC over their management of financial planning scandals and client remediation projects as well as controversies surrounding bank bill swap rates (BBSW).