Australian Prudential Regulation Authority (APRA) chairman Wayne Byres speaking at a business conference in Sydney.

  • "Household indebtedness is high. Perhaps more importantly, the trajectory is clearly for it to rise further"
  • Lenders need to be vigilant to ensure their policies and practices are both prudent and responsible
  • In short, heightened risk requires heightened prudence by APRA but also - and preferably - by lenders and borrowers themselves."

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APRA has noted only a "slight moderation" in loans that represent six times borrowers income, borrowers need to commit half their after tax earnings to repayments.

  • "High LTI (loan-to-income lending) in Australia is well north of what has been permitted in other jurisdictions grappling with high house prices and low interest rates such as the UK and Ireland"

Byres was giving a keynote address to the Australian Securitisation Forum

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APRA is concerned about financial stability. The other concern, expressed by the RBA, is the impact of high household debt on the economy (less discretionary income, less consumption, leading to lower economic growth. Combine that with slow wage growth and the concern is compounded).