While many believe that the current Australian housing slowdown is due to the stricter lending rules that resulted in the reduced supply of housing credit, the central bank chief believes otherwise.
In a Reuters report, Reserve Bank of Australia (RBA) governor Philip Lowe said the "once-booming" housing market is actually being dampened by increased housing supply and the decline in Chinese demand. For Lowe, these two factors, as well as possible risk aversion, are likely to be the root causes.
However, Lowe acknowledged that the royal banking commission's current inquiry has resulted in banks tightening their lending standards and becoming more risk-averse.
"They now have very little appetite for internal process failures. The process for approving loans is slower and more loans are probably getting rejected than previously would have been the case," Lowe said to Reuters.
Meanwhile, Lowe could not keep his disappointment with the current royal commission probe, saying that he is "appalled" at the misconduct and malpractice of the country's banks.
Speaking before a parliamentary economics committee in Canberra, Lowe pointed out to some issues raised during the course of the investigation, particularly those related to the conflicts of interest and the flawed remuneration structures.
"These conflicts can be dealt with, they can be managed but they need to be top of mind. And, if they are not top of mind, then they continue to strain bonds of trust between the community and the institution," he said, adding industry players should put these issues at a higher priority.
Collections: Mortgage News
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