APRA worried over rising household debt
Australia’s banking regulator has warned it will be more stringent on responsible lending.
In a speech to the Australian Securitisation Forum, Wayne Byres, the chairman of the Australian Prudential Regulation Authority (APRA), has warned that bank lending is helping to ramp up household debt to risky levels.
“Household indebtedness is high. Perhaps more importantly, the trajectory is clearly for it to rise further. Lenders need to be vigilant to ensure their policies and practices are both prudent and responsible,” Byres said.
Byres said APRA would have to show “higher prudence” and urged lenders and borrowers to do the same.
“High loan-to-income lending in Australia is well north of what has been permitted in other jurisdictions grappling with high house prices and low interest rates such as the UK and Ireland,” Byres said.
Byres said APRA would work to ensure household debt wasn’t growing to unmanageable levels.
"We have been challenging lenders to ensure that their serviceability methodology is robust and that includes adequate conservatism to ensure that borrowers are not unduly exposed if their circumstances were to change,” Byres said.