Australia Regulators Monitoring Household Debt, Mortgage Portfolio Risks
- Published on
- 17 Jun 2021, 09:04 AM
By Sophia Rodrigues
(Sydney, June 17, 2021)—Australia’s financial regulators are discussing potential policy options to address risks that could build up if growth in household borrowing substantially outpaced that in income.
Regulators have also noticed signs of some increase in risk-taking in the housing market and the Australian Prudential Regulation Authority has already taken the first step in writing to banks about how they are proactively managing risks within their housing loan portfolios.
The Council of Financial Regulators made the comments in a statement Thursday. This is the first time since December 2018 when the CFR began issuing quarterly statements following their meetings that concerns over household debt and housing market have been raised.
“APRA has written to the largest Authorised Deposit-taking Institutions (ADIs) to seek assurances that they are proactively managing risks within their housing loan portfolios, and will maintain a strong focus on lending standards and lenders' risk appetites,” the statement said.
The CFR noted that demand for credit by housing investors is now increasing – a development that the RBA has also recently been taking notice of.
In the minutes of the June board meeting, the RBA twice made the comment that growth in credit extended to investors in housing had strengthened from low levels.
The CFR is paying close attention to the implications of trends in household debt and discussed the risks that could build if growth in borrowing substantially outpaced that in income.
The Council of Financial Regulators is the coordinating body for Australia's main financial regulatory agencies -- the APRA, the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the RBA.