The Reserve Bank of Australia (RBA) has warned banks not to lower lending standards as home price adjustments could upset the financial sector from a surge in debt.
Twice a year financial stability review (pdf), The central bank emphasized the importance of the financial sector and avoided excessive risk taking in the form of easing lending standards and easing internal restrictions.
“Even if lenders do not weaken their settings, an increase in risk-taking by optimistic borrowers can see a decline in the average quality of new loans,” the review said. “This will weaken the resilience of businesses, households and, by extension, the financial system to future shocks.”
As prices continue to rise, he warned that “excessive enthusiasm” and “extrapolational expectations that could weaken lending standards could weaken and prices could exceed real values.”
“If the borrower’s income declines and debt repayment becomes the default, asset price adjustments will be exposed to significant losses to the increased debt of the lender, especially if the quality of the debt deteriorates,” the report said. Is writing.
This could warn the RBA and lead financial regulators to consider what to do if risk-taking in the financial sector increases. But they also said Australia’s lending standards are now “almost unchanged.”
In response to the RBA’s warning, the federal government said it was watching the situation closely, and housing minister Michael Soccer said the government was “extremely pleased” that the home was still in a dominant position in the market. Stated. ..
“On average, we see affordability at its highest level in 20 years, so first-time homebuyers are at a very high level and homeowners account for nearly three-quarters of the market. “Sukkar said. Said Sky News Australia. “People who own or buy their own homes are in an absolutely dominant position.”
“But of course we are very careful about these things. We want to make as many Australians as possible to buy their first home,” he said.
The review also warned that short-term financial stress could increase as several financial support measures, including JobKeeper and the mortgage deferral scheme, ended. However, despite this situation, he noted that the majority of households and businesses that had been deferred had returned to full repayment.