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Australia’s central bank sees risks in debt build-up By Reuters

by Mike Robinson

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© Reuters. FILE PHOTO – Two women stand next to the Reserve Bank of Australia Headquarters in central Sydney on February 6, 2018, Australia. REUTERS/Daniel Munoz/File Photo

SYDNEY (Reuters), Australia’s central banking said that there was a greater risk that household debt would destabilise financial systems and that banks must maintain strict lending standards amid a volatile housing market.

Reserve Bank of Australia released its semi-annual Financial Stability Review on Friday. The RBA stated that while the system was sound and capitalised in general, it was at risk of overcapitalisation by buyers due to excessive housing market activity.

The main bank watchdog in Australia, Australian Prudential (NYSE) Regulation Authority (APRA), announced a slight tightening in home loan regulations earlier this week in response to the boom that has fueled by debt in the housing sector.

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