RBA: Risky Loans Haven’t Increased Significantly

Central banks from Scandinavia to the U.K. to New Zealand are sounding the alarm about soaring mortgage debt and trying to curb risky lending. In Australia, where borrowing is surging, regulators are just watching.

Australian household debt is at a 25-year high, according to statistics bureau figures, and a government inquiry this month found housing to be a significant source of risk to the financial system. The average mortgage is at least four times household income in almost 80 percent of the country, research by Digital Finance Analytics shows.

While the U.K., Denmark and New Zealand introduce measures including loan limits, caps on interest-only mortgages and repayment tests, the Reserve Bank of Australia and the country’s banking regulator are holding their fire, saying risky loans haven’t increased significantly. The central bank also has said the price gains so far are spurring needed construction, easing housing shortages in some areas.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.