No need for government to curb booming housing market, regulator says

There’s no need for the government to step in to curb booming housing prices, as lending standards are holding up “pretty well,” according to the banking regulator.

Wayne Byres, chairman of the Australian Prudential Regulation Authority, said macroprudential measures wouldn’t be necessary unless financial institutions began engaging in risky behaviour.

“Risk for the financial system occurs when lending standards are poor or weak,” Byres said during an event held by the Committee for the Economic Development of Australia. “We don’t see that up to now – banks have done a pretty good job in holding lending standards up.”

Byres also said that current regulatory settings were “broadly right,” since APRA’s mandate was broader than the stability of the financial system at all costs, The Australian reported. He said the evidence suggested that strong financial systems were emerging in better shape from the COVID-19 crisis, reporting stronger credit growth and economic expansion.

Read more: Government should stay out of housing market, lenders say

“So you don’t want to give that up lightly, and you want to be really confident that a shock is not coming tomorrow,” Byres said. “I don’t know how you could confidently say when the next crisis is.”

APRA had tried to act in a counter-cyclical fashion when the pandemic hit, with loan deferrals and the release of capital buffers, Byres said. He said the regulator was now refocusing on its core supervisory role as the economy emerged from COVID-19. He said APRA had “sharply narrowed” its priorities due to the onset of the pandemic.

“The eruption of a crisis, however, doesn’t mean other issues go away,” he said. “Now the economic recovery is well underway, it’s important we start to look more broadly again.”