Broking association says APRA should be extremely cautious
The mortgage broking industry warns that Australia could be at risk of a “housing recession” if regulators go too far in implementing macroprudential measures to cool the red-hot housing market.
Peter White, managing director of the Finance Brokers Association of Australia, said that regulators needed to be extremely careful in implementing brakes on the housing market if they want to avoid unintended consequences, The Australian reported.
“One of the risks in lifting serviceability rates, which has been proposed by some banks, is that borrowers become mortgage prisoners because they can’t refinance even if the repayments would be lower,” White said. “Any measures to curb the boom must have a clear rationale, otherwise there’s a risk of a housing recession. So we would oppose higher floor rates if there are no accompanying measures to ensure borrowers can refinance.”
The Customer Owned Banking Association also urged regulators to ensure that they avoid anti-competitive effects on smaller banks, The Australian reported. COBA said that any policies should be specifically targeted at a “clearly identified problem” so mutual banks and first-home buyers would not be disadvantaged.
Read more: APRA planning macroprudential framework
“Adequate consultation prior to intervention will reduce the risk of unintended consequences on smaller banks from any macroprudential measures,” said Michael Lawrence, COBA chief executive.
Several industry groups expressed reservations about regulatory intervention in the housing market after the Council of Financial Regulators said on Wednesday that it had discussed potential macroprudential measures to curb the housing boom, The Australian reported.
Minutes of the most recent CFR meeting said that the Australian Prudential Regulation Authority would publish an information paper over the next couple of months detailing a framework for macroprudential policy.
