Little evidence of lending free-for-all: APRA's Wayne Byres

Little evidence of lending free-for-all: APRA's Wayne Byres
Little evidence of lending free-for-all: APRA's Wayne Byres

Australian Prudential Regulatory Authority chairman Wayne Byres has said there is little evidence of a lending free-for-all.

The APRA chairman defended the banking regulators’ actions to reduce what were perceived to be growing risks in Australia’s housing market.

Speaking to lawmakers in Canberra, Byres said that without the introduction of tighter macroprudential measures it may have led to interest rate increases from the Reserve Bank of Australia and a further deterioration in lending standards.

He faced more than an hour of questioning about revelations of poor lending standards from the Hayne royal commission at the House Economics Committee yesterday.

"We are still dealing with an environment in which arrears are not particularly high, they are higher than they have been for a while, but if lending was a free-for-all in the way that some are suggesting I think arrears rates and other things, indicators of financial stress, would be much higher than what they are now" Byres said.

The latest RBA data the proportion of impaired housing loans as a proportion of all loans is 0.15 per cent. 

Sarah Henderson MP, the new chairman for the committee, asked whether the Australian community could have the confidence that APRA was up for the task.

Byres explained that the chief banking regulator had been engaging the largest lending institutions about their lending standards for several years and many of the issues raised were the responsibility of the corporate regulator, the Australian Securities and Investments Commission.

"The prudential standards are about safety ... boiled down to its absolute essence is the question 'Is the money of depositors safe' and I don't think anyone has drawn the conclusion that that isn't the case ... we shouldn't suggest that there is any threat at all to depositors money here," Byres said.

Byres was asked to elaborate on comments made before the House Economics Committee last month when he said the macro-prudential limits were "reaching the end of their useful life".

Byres said the 10 per cent cap on the rate of investor lending announced in December 2014 was likely to be the first measure to be unwound.

Byres said he couldn't foreshadow the removal of the 30 per cent cap on the flow of new interest-only loans which was announced 12 months ago as "we've only just got that in place".

 

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