The Reserve Bank and the nation’s prudential regulator are poised to tighten lending standards in the face of soaring property prices and growing household debt as Treasurer Josh Frydenberg says higher house prices are good for the economy.
CoreLogic’s daily dwelling value index shows Sydney property values have increased by another 1.5 per cent through the first 17 days of June while in Melbourne they are up by 0.9 per cent. “It’s a good thing when the price of their home goes up, [it] gives them more confidence to consume, gives many small business who mortgage their home [the chance] to invest in their businesses. Overall it’s a good thing for the economy when house prices go up as opposed to going down,” Mr Frydenberg said.Advertisement
Those responses include increasing required loan-to-value ratios on mortgages or directing banks to reduce their exposure to mortgages for investors. The CBA is moving ahead of regulators, lifting its assessment rate from 5.1 per cent to 5.25 per cent, a move that is likely to pare back the maximum amount some customers can borrow.
The government is also increasing the price caps under which the First Home Loan Deposit Scheme operates, in a sign that high prices are making it more difficult for people to get into the property market.
swrighteconomy clancyyeates So Australia has a bank lead Ponzi housing scheme like New Zealand?
swrighteconomy clancyyeates Australia has been running this property Ponzi scheme since the mid 80s, when the RBA decided to lower the risk weight on housing, lighting the bonfire. That continued under APRA which has no obligation to consider the dramatic and skewed effect this has had on investment.
swrighteconomy clancyyeates all this hot money has suddenly seen the light