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APRA on alert as owner-occupied competition heats up

APRA on alert as owner-occupied competition heats up

by Julia Corderoy | 23 Oct 2015

Banking regulator APRA says it will remain “very alert” to decaying credit standards as competition for owner-occupied home loans heats up.

Appearing before the Senate Economics Legislation Committee in Canberra yesterday, APRA chairman Wayne Byres noted that while the banks had responded to its guidelines and reigned in investment lending, the growth in lending to investors had been offset by increased competition in the owner occupied market.

“Many of these changes have only recently come into effect, so we are watching carefully to see how they play through the system,” Byres said.

“Based on the latest available data, the rate of growth in credit for housing is, in aggregate, still accelerating. However, within this there is a compositional switch underway, as a moderation in the growth in lending to investors has been offset by somewhat stronger growth and more competition in lending to owner occupiers.”

As such, Byres said the regulator will be watching closely for any signs of declining lending standards.

“In such an environment, APRA remains very alert to any sign of deteriorating credit standards, and is monitoring that those ADIs identified as needing to strengthen their lending policies do indeed do so.”