Login
ISCOVER
The Reserve Bank of Australia has raised the possibility of implementing new rules to cool the property market.
Governor Glenn Stevens said he is concerned that investor finance is growing at double-digit rates and represents nearly half the flow of new approvals.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
“A lot of this is interest-only lending in an environment of rising house prices, especially in Sydney and Melbourne,” he told the Melbourne Economic Forum.
Mr Stevens said he could see minimal downside in introducing new regulation, because ‘macroprudential tools’ might improve the situation in a best-case scenario or have no effect in a worst-case scenario.
“I’m not naïve enough to believe that these kinds of tools are any kind of panacea or a permanent solution,” he said.
“But that doesn’t mean you shouldn’t use them for a period, if at the margin they might be helpful, and that’s the kind of thing that’s in my mind, nothing more.”
AMP Capital chief economist Shane Oliver said the use of macroprudential tools could be good news for mortgage holders if it delayed the next increase in the official cash rate.
“The focus looks like it may be on tougher capital requirements and interest rate tests banks apply when assessing new loans rather than restrictions on LVRs,” he said.
“It’s likely that if the property market does not soon cool an announcement could be made in the next few months.
