Eights charts on the housing mortgage market that matter: APRA chairman Wayne Byres

The Senate Economics Legislation Committee, Canberra have been given some charts which APRA chair Wayne Byres considered was helpful for any discussion on the house mortgage market.

The APRA benchmark of no more than 30 per cent of new lending by Australian banks being on interest-only terms was not overly restrictive for borrowers who genuinely need the form of finance, APRA noted recently.

While roughly 1-in-3 loans granted can still be on an interest-only basis, APRA boss Wayne Byres advised last month that data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only.

Byres said it had required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal.

"The industry has been quite successful in doing so:, and the number of interest-only loans with high LVRs continued to fall to quite low levels.

"All of that is positive for the quality of loan portfolios," he told the A50 Australian Economic Forum dinner.

"While the direction in asset quality is positive, we’re not declaring victory just yet.

"We still want to see that the improvements the industry has made are truly embedded into industry practice.

"And we can modify our interventions as more permanent measures come into play.

"That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government.

"Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis," he said.

Byres told yesterday's hearing APRA did not have any particular target for house prices.

A recent review of the financial sector by the Productivity Commission found the clamp-down on interest-only applications may have actually provided a windfall for the banks and a cost to taxpayers.

Byres said he wasn't about to challenge the commission's calculation but said its view was oversimplified and believed there were other drivers at work.