Australia’s real estate industry warns against unnecessary interest-only crackdown
Industry calls regulatory clamp down "a sledgehammer".
Industry calls regulatory clamp down "a sledgehammer".Both the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investment Commission (ASIC) have vowed to clamp down on interest-only lending, with APRA placing new limits on banks and ASIC increasing its scrutiny of the practice.
But the Real Estate Institute of Australia (REIA) claims regulators have overreacted.
REIA president Malcolm Gunning said warnings about interest-only loans and over-committed borrowers might be justified in some circumstances, but this does not mean all interest-only loan borrowers should be penalised and outlawed.
"The cumulative impact of the collective action of APRA, ASIC and individual banks could well be a sledgehammer when only some fine tuning was required," he said.
Gunning warned against constraining the building and construction sector, claiming market information from agents in Sydney and Melbourne suggested a slowdown was already underway.
"The actions of regulators and banks to restrain the surge of property investment in the two major capital cities are reacting to what we see in the rear vision mirror," Gunning said.
"The data being acted on is lagged. We need to consider what is happening in the market place at the moment and what the combined impact of these measures will have - none of which will be apparent for some time to come."
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