Banking regulator APRA says individual banks targeted in crackdown on investor loans

ABC News – 21 March, 2015

By Sue Lannin

http://www.abc.net.au/news/2015-03-20/apra-says-individual-banks-targeted-in-investor-loan-crackdown/6337208?

Australia’s banking regulator says its new 10 per cent limit on annual growth in property investor loans is a trigger, not a cap.

Australian Prudential Regulation Authority (APRA) chairman Wayne Byres made the statement while answering questions before a federal parliamentary committee on Friday.

Late last year, APRA said it would crack down on the surge in loans to property investors, by setting a 10 per cent annual growth limit on investor loans by the nation’s banks

Mr Byres told legislators that APRA had written to banks and told them to rein in their investor loans.

He said individual banks would be targeted for higher capital requirements to clamp down on risky lending, but the crackdown would not be revealed publicly.

“So far, our discussions with the major lenders have suggested they recognise that it’s in everyone’s interests for sound lending standards to be maintained,” Mr Byres told the House of Representatives Standing Committee on Economics.

“But we shall see, and we’re ready to take further action if needed.”

Houses prices have surged over the past year and investors have fallen over themselves to cash in with interest rates at record lows.

A study by economics website MacroBusiness found three of the four big banks had breached the new APRA cap on loan growth to property investors.

But Mr Byres said those loans would have been approved before the limit came in.

“Much of that would have been loans that were approved well before our letter went out.”

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