Friday, October 16, 2015

RBA Financial Stability Report: Lending standards tighter

FXStreet (Bali) - RBA Financial Stability Report notes that indicators of financial stress remain fairly benign, and that lending standards have been tighter this year.

Headlines via Reuters

Risks around housing and mortgage markets seem higher than average

Bank lending standards were weaker than first seemed, have now been tightened

Says lending risks appear to be "comfortably manageable" at this stage

But regulators seeking a "permanently stronger" level of bank lending standards

Risks growing in commercial property sector due to investor demand
Sees risk of downturn in Melbourne, Brisbane apartment markets due to oversupply

Tentative signs that sentiment is turning in Sydney, Melbourne housing markets

Possible some banks may have to slow their home lending yet further

Some investors might be under-pricing liquidity risk.

With the US Federal Reserve's first tightening since 2006 in prospect, the risk is that this combination of factors could trigger a sharp repricing in markets

Indicators of household financial stress remain fairly benign

Key challenge will be to keep lending standards tight given environment of low rates

Household and banking sectors are becoming better placed to manage the risk environment than they were a year or so ago
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