From the (gated) Australian Financial Review: Home loan cap an option, says RBA’s Edwards
Reserve Bank board member John Edwards says
- Australian regulators could eventually follow New Zealand and cap lending by banks to households to stem house price growth
- However, we are not at that point yet
- said if domestic house prices continued to soar,the Reserve Bank could do what New Zealand did last year and cap bank
lending by requiring higher loan-to-value ratios
“If we thought the [housing] problem was sufficiently permanent and critical for us, we could try doing what New Zealand’s done which is to impose upon banks loan-to-value ratios that might have the effect of, say, reducing the rate of growth of house prices,” Mr Edwards told a Committee for Economic Development of Australia event in Melbourne. “But we are a very long way from having to think about that possibility.”
