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Regulators have been warned that ‘macroprudential tools’ could damage the “really strong pipeline” of new home approvals.
The Reserve Bank of Australia revealed last week that macroprudential tools or new lending rules would probably be introduced by the end of the year.
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RP Data senior research analyst Cameron Kusher told The Adviser in a video interview that regulators were concerned about the level of investor activity, particularly in Sydney and Melbourne.
However, Mr Kusher warned that regulators could threaten the “really strong pipeline” of residential construction approvals if they used the wrong macroprudential tools.
“So they don’t want to introduce a tool that will potentially see all those new units and houses that are approved for construction not ultimately be built,” he said.
Mr Kusher said he preferred the UK policy of limiting mortgages to a certain ratio of the borrower’s income rather than New Zealand-style LVR restrictions.
“But maybe even something as simple as making the banks hold more capital against residential mortgages would be a way to encourage banks to lend to people outside the mortgage space – maybe lend more to businesses or personal loans,” he said.
“We’ll probably see some different iteration to what we’ve seen in those other [countries] here in Australia, if and when it’s introduced.”
[Related: Brokers speak out against ‘artificial intervention’ in lending rules]
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