Housing bubble fears prompts action from regulators
The Australian Securities and Investments Commission (ASIC) plans to probe the mortgage lending standards of the Big Four, particularly honing in on interest-only loans.
ASIC's activities are part of a broader investigation by Australian regulators, including the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) following fears that high-risk lending practices could be partially behind the surge in housing prices in Sydney and Melbourne.
Interest only loans, as a percentage of new housing loan approvals by banks, reportedly reached a high of 42.5 per cent in the September quarter.
"While house prices have been experiencing growth in many parts of Australia, it remains critical that lenders are not putting consumers into unsuitable loans that could see them end up with unsustainable levels of debt," ASIC Deputy Chairman Peter Kell said.
"Compliance with responsible lending laws is a key focus for ASIC. If our review identifies lenders' conduct has fallen short, we will take appropriate enforcement action."
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