Australia’s financial regulators have launched a joint attack on risky home lending as investment and interest-only loans threaten the stability of the financial system.
The Australian Prudential Regulation Authority called an emergency meeting with the nation’s banks to tell them of new speed limits that will prevent them from aggressively pursuing investment property borrowers.
At the same time, the Australian Securities and Investment Commission said it would investigate interest-only loans, which make borrowers highly sensitive to movements in interest rates.
The move could put the brakes on the rampant property markets in Sydney and Melbourne, which have seen house prices rise at a double-digit pace fuelled in part by demand for investment loans.