APRA’s new chairman, Wayne Byers, appeared at a CEDA event yesterday:
Australia’s big four banks are now offering “guarantor loans” at up to 100 per cent of the purchase price of houses and apartments. This means people can borrow without a deposit if they have a family member as a guarantor. Asked if this was too risky, APRA chairman Wayne Byres said the regulator was closely monitoring banks’ exposure to house prices.
“The Australian banking system clearly has a concentration of risk in housing,” he said at a Committee for Economic Development of Australia event in Melbourne. “If anything was to go wrong in the housing market it would have very severe impact on the viability and health of the banking system, so it’s naturally something we watch very carefully.”
…Mr Byres said APRA had recently released guidance for banks on how mortgage risks should be managed, and had asked the chairmen of the boards of the major banks to provide feedback on how they were monitoring risks to the economy of changes in lending standards.
“At this stage our message has been, ‘We’re watching very closely; we want to make sure you’re fully on top of what you’re doing,’ ” he said. “The competitive pressures are definitely there and that’s, generally speaking, a good thing. We just don’t want it to get too far out of whack.”
With respect, Mr Chairman, it’s already out of whack:
If it was a bubble in 2003, what is it now? I am at least encouraged by the phrase “at this stage”. Get on with bringing your macroprudential into the light for all to see, APRA.
