Australia`s four biggest banks have already cut back on home loans in recent months and pulled away from institutional lending to real estate developers, as regulators force them to keep aside more capital and slow lending to speculative property investors.
Non-bank lenders have been quick to pick up the slack, with their loan-books expanding at a much faster clip than the banking sector`s 6.5 percent overall credit growth. This development is stoking concerns for authorities as a combination of record-high property prices and stratospheric household debt sit uncomfortably with slow wages growth.
"APRA does not have powers over the lending activities of non-bank lenders, even where they materially contribute to financial stability risks," Treasurer Scott Morrison and financial services minister Kelly O`Dwyer said in a joint statement.
"Today, the government is releasing draft legislation for public consultation that will provide APRA with new powers.
These new powers will allow APRA to manage the financial stability risks posed by the activities of non-bank lenders, complementing APRA`s current powers."
The consultation of the draft bill will close on August 14.
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