APRA doesn't see role as solving housing affordability

The Australian Prudential Regulation Authority chairman Wayne Byres has told parliamentarians that the regulator’s job was not to “solve house prices” or “solve affordability.” But Byers did tell the House of Representatives Economics Committee that APRA was watching closely for riskier lending. “The last statement from the Council of Financial Regulators said quite clearly we are watching for a deterioration in lending standings and that’s not evident at this point,” he said “That is not to say it won’t emerge but it’s not obvious at this stage.” Byres accepted that house prices would rise faster than incomes when he noted the regulator remained focused on protecting depositors and the stability of the financial system. “It’s not our job to solve house prices and it’s not our job to solve house pricing affordability,” Byres said. “We are watching for a deterioration in lending standings, and that’s not evident at this point. "That is not to say it won’t emerge, but it’s not obvious at this point,” Mr Byres said. The comments come despite strong monthly price growth and the highest auction clearance rates in years. The AFR recently reported APRA data revealed a 31 per cent increase in interest-only loans, a 27 per cent increase in mortgages with a loan-to-valuation ratio (LVR) of 95 per cent and a 26 per cent increase in mortgages where the borrower was granted a loan more than six times their annual income. Byres noted buying activity was being driven by first home buyers, which was creating a different dynamic to the prior times of APRA intervention that curbed investor and interest-only loans in 2014 and 2017. Byers did note the vast majority of home owners who stopped mortgage payments during the pandemic last year had resumed repayments. Deferred loans accounted for 0.5 per cent of banks’ total loan books in February, the parliamentary committee was advised on Monday. It was down from 10 per cent on last May. APRA will be monitoring how lenders dealt with customers still struggling to pay their mortgages.