an increase in debt, as historically low interest rates made larger loans more affordable. Recent data show that over the past year, the total value of monthly home loans approved escalated by more than two-thirds, and this was excluding the refinancing of existing loans.
Over the recent months, many analysts warned that the situation may trigger a macroprudential intervention by regulators, as overall credit growth reached double digits. Last month, multinational investment banking company the Macquarie Group noted that while the Reserve Bank of Australia and the Australian Prudential Regulation Authority (APRA) continued to insist that such measures are not designed to control house prices, it is unlikely regulators would sit back and watch as credit growth climb higher and higher.
After much speculation, last week, Treasurer Josh Frydenberg gave the strongest indication yet that a home loan crackdown may be just around the corner, suggesting that analysts may have been correct afterall. Following a meeting between the Reserve Bank, the APRA and the federal government on Friday (24 September), the Treasurer confirmed that the latest housing boom was a key topic of discussion among the officials.
“Last Friday, I joined the Council of Financial Regulators to discuss a range of issues including the state of the housing market which is a particular focus for both APRA and the RBA,” Treasurer Josh Frydenberg told the ABC in a statement. “We must be mindful of the balance between credit and income growth to prevent the build-up of future risks in the financial system.”
The last time the Trans-Tasman nation saw a big property boom was between…
