APRA unlikely to take New Zealand style approach to lending constraints... 'Four pillars' approach needs to go... ...
APRA unlikely to take New Zealand style approach to lending constraints
Despite hot spots in Sydney and Melboure, the Australian Prudential Regulation Authority says lending criteria should be consistent nationally, according to an article in the Sydney Morning Herald.
City-specific restrictions like those in New Zealand are unlikely to be replicated in Australia to slow down the hot markets in Sydney and Melbourne.
APRA chairman Wayne Byres said, "Our mandate is to preserve the resilience of the banking system, not target housing prices in a particular region of the country."
"Sound lending standards – prudently estimating borrower income and expenses, and not assuming interest rates will stay low forever – are just as important, and maybe even more so, in an environment where price growth is subdued as they are in markets where prices are rising quickly."
'Four pillars' approach needs to go
The key recommendation of a new research report is for the 'four pillars' policy to be removed, according to an article on Investor Daily.
The Centre for International Finance and Regulation (CIFR) has released the Competition in Financial Services research report with lead author Dr Rob Nicholls saying, "All of the big four banks currently operate in a way that allows for divestment of non-performing or strategic assets."
"However, the focus on the four pillars by the twin peaks of both ASIC and APRA potentially leads to a focus which provides a barrier to exit or entry."
The paper found the four pillars policy was "industry policy at its worst" with little or no benefit to consumers.
Despite hot spots in Sydney and Melboure, the Australian Prudential Regulation Authority says lending criteria should be consistent nationally, according to an article in the Sydney Morning Herald.
City-specific restrictions like those in New Zealand are unlikely to be replicated in Australia to slow down the hot markets in Sydney and Melbourne.
APRA chairman Wayne Byres said, "Our mandate is to preserve the resilience of the banking system, not target housing prices in a particular region of the country."
"Sound lending standards – prudently estimating borrower income and expenses, and not assuming interest rates will stay low forever – are just as important, and maybe even more so, in an environment where price growth is subdued as they are in markets where prices are rising quickly."
'Four pillars' approach needs to go
The key recommendation of a new research report is for the 'four pillars' policy to be removed, according to an article on Investor Daily.
The Centre for International Finance and Regulation (CIFR) has released the Competition in Financial Services research report with lead author Dr Rob Nicholls saying, "All of the big four banks currently operate in a way that allows for divestment of non-performing or strategic assets."
"However, the focus on the four pillars by the twin peaks of both ASIC and APRA potentially leads to a focus which provides a barrier to exit or entry."
The paper found the four pillars policy was "industry policy at its worst" with little or no benefit to consumers.
