Banks warned over lending standards
Going up: Banks must make sure borrowers can service their loans, the regulator says. Photo: Louie Douvis
The financial regulator has warned the nation’s banks not to let lending standards slip in an environment of cheap credit, saying borrowers must be prepared for higher interest rates.
As the $1.2 trillion mortgage market heats up, an official audit of lending standards by banks and other lenders has highlighted areas where the sector could lift its game.
The warning by the Australian Prudential Regulation Authority came amid signs the housing market is starting to move ahead with prices posting their strongest quarterly gain since the end of the 2010 boom.
The national dwelling value rose 4per cent in the three months to August, the highest rate of capital gain since April 2010, right before the last boom began to fizzle, according RP Data-Rismark figures released this month. Sydney dwelling values shot up 5.4 per cent over the quarter and values in Melbourne rose 4.8 per cent.
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