No need to curb home lending

According to the latest report of the Australian Financial Review (AFR), recently the Australian Monetary Authority (APRA) and Westpac have jointly voiced that the current real estate market is very healthy. The price increase is due to the existence of demand and is still under control, so there is no necessary policies to restrict housing loans.

APRA Chairman Wayne Byres said on Monday that there are no plans to intervene in the real estate market because there is no evidence that lending standards have deteriorated, despite the record monthly increase in house prices and the highest auction clearance rate in 3 years. Market demand is strong, mostly driven by first home buyers, which is different from the situation in 2014 and 2017 that forced the regulator to restrict investors and pay only interest loans.

Westpac CEO Peter King issues a statement supporting the Australian Monetary Authority (APRA) not restricting mortgages. He said that the soaring housing prices are market-driven, and the current situation is very different from the last time the restrictions were introduced, and we are still within control.

But at the same time, Byers also admitted that house prices will grow faster than income. But he pointed out that this is not the responsibility of APRA, and that the regulator will still pay attention to protecting depositors and the staibility of the financial system. He said, "Our job is not the control housing prices, nor is our job to solve housing affordability issues. We are paying attention to whether the loan sitatuion has deteriorated, and we can't see it yet."

Byers said APRA, the Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) are closely monitoring developments, including high loan-to-value (LTV) ratio and high debt-to-income ratio (DTI) loans, but no single indicator can trigger new lending restrictive measures.

Source: The Australian Financial Review 2021