Business
Whose job is it to douse this home price bonfire? Actually, nobody’s – Sydney Morning Herald
There are tools, other than lifting interest rates, to stop property prices getting out of control.
In 2014, the Australian Prudential Regulation Authority imposed a cap of 10 per cent on annual growth in new investor loans. In 2017, it also set a threshold for the proportion of lending that could be interest only that is, not requiring repayments of principal.
It worked. Prices cooled. For a time.
Then, in late 2018, these restraints were removed. In mid-2019, APRA went one step further and reduced the interest rate against which lenders must assess a borrowers capacity to pay. It dropped it…
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