Regulators starting to look at loan curbs – ex APRA head

Incredibly low interest rates are causing buyers to flock to lenders – and house prices are skyrocketing. Just last month alone saw house prices leap a staggering 2.1% - and one ANZ economist has already predicted some form of lending action by the regulators.

Now another expert has voiced their concerns – former APRA chairman Jeff Carmichael has told The Age that he believes that lending restrictions are certainly being discussed at the moment, describing the home price hikes as “the starting of overheating”.

“I think APRA will be starting to look at those very carefully, certainly over the next six to 12 months — whether they need to make adjustments in LVRs, debt-to-income ratios, debt-service ratios to raise the bar for the banks, so that they are not fuelling that overheating in the mortgage market,” he told The Age.

Is is possible, if not probable, that lenders will start restricting their own offerings if they become concerned about the market.

Housing loan commitments continue record runhttps://t.co/gbQhLoMM1i

— Australian Bureau of Statistics (@ABSStats) March 1, 2021

The regulator has acted twice before in relatively recent history – forcing banks to restrict their offerings to investors in 2014, and getting tough on interest only loans in 2017.

January Figures (new-borrower accepted loan commitments, seasonally adjusted)

Value of new loan commitments to owner occupiers +10.5%