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Australia’s prudential banking regulator has driven reform of the mortgage market but remains wary of how the changes will play out.
APRA chairman Wayne Byres told the Senate Standing Committee on Economics that the mortgage market has responded to the regulator’s attempts to reinforce sound lending standards in an environment of heightened risk.
Mr Byres said that APRA had spent the first half of 2015 engaging with lenders to assess their risk management practices.
In many cases, this led to lenders making changes to their lending policies and growth aspirations to ensure that sound practices were being maintained, he said.
“Many of these changes have only recently come into effect, so we are watching carefully to see how they play through the system,” he 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.”
Mr Byres said that APRA “remains very alert to any sign of deteriorating credit standards” given the current lending environment.
The regulator is monitoring those banks identified as needing to strengthen their lending policies, he added.
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