RBA tightens lending standards

THE RBA has already acted to tighten lending standards after analysing the economic risks of Australia's recent housing boom.

National housing prices have risen more than 11% during the year to August.

Prices have skyrocketed by 16% in Sydney and 45% of new loan approvals have been investors - a record high for the city.

In its semi-annual financial stability review, the RBA expresses concern the risks associated with recent lending behaviour are likely to be 'macroeconomic in nature rather than direct risks to the stability of financial institutions'.

The RBA believes speculative demand could amplify the property price cycle.

The decision to tighten lending standards is expected to improve banking sector risk management practices.

But the RBA has not ruled out taking further steps.

The moves come on the back of calls from the Australian Council of Social Service for the Federal Government to overhaul property market tax, specifically negative gearing.

The comments were part of a wider debate sparked by the release of the Housing Industry Association-commissioned report, Economic Impacts of Negative Gearing of Residential Property, this week.


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