Pfft, the RBA will not hit the housing brakes this year

The AFR is today reporting that house price controls are imminent from regulators:

  • Apparently “pressure” is building on the RBA to slow house prices though from where that pressure is coming the article does not say (because let’s face it, there isn’t any).
  • RBC says the RBA is readying macroprudential tools.
  • These will include limits to high LVR loans and mandated percentages of low LVR loans plus hiked interest rate buffers for loan calculators.
  • The controls will come in Q4, 2021.

No doubt, after years of MB campaigning, the Council of Financial Regulators is now preparing a new round of macroprudential tools. But preparing tools and deploying tools are two very different things.

For regulators to actually move forward they will need to see a whole range of conditions fall into place that are much wider in scope than just “white hot” house prices. These fall into two broad categories. Inflation targets and financial stability.

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