The Australian Prudential Regulation Authority has warned it will increase oversight of mortgage lending amid rising house prices and an increase in the number of homes bought to rent.
Loans to landlords account for the majority of mortgages, the highest share on record, while house prices in the capital, Sydney, were up 13.2% on the year in November.
The regulator urged banks to cap home lending growth to investors to 10% annually, as well as to add a 2% buffer to their home-loan rates and to use a floor lending rate of at least 7% when assessing a borrower’s ability to meet repayments.
The APRA plans to review lending practices in the first quarter of 2015.
Click here for the full Bloomberg article
