An Australian $100 note and a set of gold measuring scales form part of a public display at the Reserve Bank of Australia office in Sydney January 16, 2003.
An Australian $100 note and a set of gold measuring scales form part of a public display at the Reserve Bank of Australia office in Sydney January 16, 2003. The commodity-based currencies of Australia, New Zealand and Canada have breezed past larger rivals and are exected to appreciate through 2003 as investors pile in to seize the rewards of steady economic expansion. Reuters/Tim Wimborne

The Australian Prudential Regulation Authority has raised concerns over declining standards of housing credit among mortgage lenders across Australia.

The rate of housing credit is significantly increasing, APRA chairman Wayne Byres told the federal parliament’s economics committee on Friday. He said that there have been some transformations in the lending mix, with an increasing number of borrowers of housing loans, but the scenario still seems to be witnessing a decline in credit standards.

“In such an environment, APRA remains very alert to any sign of deteriorating credit standards,” he claimed.

Byres also reminded the Committee of the letters APRA had written to all Authorised Deposit-taking Institutions in December 2014, which covered the necessity of maintaining proper lending standards to ensure banking institutions are never struck by heightened financial risks.

As was specified in the memo, APRA has kept an eye on lending policies and growth aspirations of ADIs in the early half of 2015 to examine their capability in handling risks within an environment where sudden economic challenges can emerge. The regulator continues to assess whether institutions have adequate lending policies.

APRA’s emphasis is on forcing lenders to keep more capital as a buffer for the losses incurred by loans. This focus has been determined as one of the most vital causes behind increasing mortgage interest rates by the big four banks - the Commonwealth Bank of Australia, National Australia Bank, Westpac and ANZ Bank.

Commonwealth Bank will raise the mortgage rate by 15 basis points, Westpac will hike the rate by 20 basis points and NAB will lift its variable rate to 5.6 percent. ANZ has also decided to increase its rate, although it has not yet specified by how much.

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