Tightened lending is coming: former APRA boss

The former APRA chairman Jeff Carmichael believes that lending restrictions are being discussed at the moment by banking regulators. It comes as he sees the recent 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. Carmichael expects lenders could start restricting their own offerings if, and when they become concerned about the market given housing loan commitments continue at record levels according to the Australian Bureau of Statistics. The regulator has acted twice recently in restricting lending forcing banks in 2014 to restrict their offerings to investors and in 2017 with interest only loans restrictions. The current boom is however being driven by owner occupiers. Last week the Council of Financial Regulators, which is made up of the RBA, Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the federal Treasury, advised it was keeping a close eye on lending standards. Most economists think any macroprudential policies to restrict lending will not be introduced until 2022.