The banking regulator will impose restrictions on home loans from early next year to limit the number of “high-risk” large loans being issued to customers.<\/p>\n
The move also highlights two important issues.<\/p>\n
The first is that all our financial regulators, from Australian Securities and Investments Commission (ASIC) and APRA to the Reserve Bank, are actively eyeing off potential threats to the economy.<\/p>\n
And, more importantly, it perfectly illustrates why economic management across the developed world has been largely removed from government.<\/p>\n
Our housing price bubble has been ably assisted by governments stretching back more than half a century.<\/p>\n
Tax incentives to invest in property and to then limit taxes on the capital gains<\/a> have directed much of our savings into merely putting a roof over our heads.<\/p>\n Loading…<\/p>\n While we delude ourselves each year into believing those reports about the enormous growth in Australian household wealth \u2014 driven mostly by hugely expensive housing values \u2014 we rarely look on the other side of the ledger.<\/p>\n That’s where close to $3.3 trillion worth of debt is sitting, overwhelmingly driven by enormous mortgages.<\/p>\n Australian household debt is among the highest in the world.<\/p>\n That poses a potential threat to our financial stability, limiting the Reserve Bank’s ability to cut interest rates.<\/p>\n That is why APRA is acting<\/a>, even if ever so meekly.<\/p>\n Loading…The never-ending boom<\/p>\n It’s been called a bubble for more than 15 years. But the great Aussie housing price boom has barely skipped a beat in the intervening years.<\/p>\n It’s outrun a global financial crisis, a pandemic that brought the global economy to a halt, and kept on rolling even through the most punishing rate-hiking program in history.<\/p>\n Huge population growth propelled by a large rise in immigration and large amounts of fiscal and monetary stimulus have driven the momentum.<\/p>\n Over the years, the debate has shifted.<\/p>\n The bubble fears \u2014 and the threat that poses to the broader economy \u2014 have been overtaken by concerns about affordability<\/a> and the potential shift in Australian society that beckons.<\/p>\n Forget AI. Here’s a real Aussie bubble<\/a><\/p>\n Amid global warnings of impending financial doom, APRA and the Reserve Bank are far more concerned about a home-grown bubble, one that’s been taking in oxygen for almost three decades.\u00a0<\/p>\n Only those born into a household with property will likely ever end up owning one themselves, widening a wealth chasm that threatens to fundamentally change the way Australians see themselves.<\/p>\n Attempts to reform the system have been political suicide.<\/p>\n Bill Shorten came to grief in 2019 with his proposal to wind back the generous tax concessions for property investors and no-one has been game to touch it since.<\/p>\n Instead, our political leaders resort to policies that throw cash at the problem, making a dire situation even worse.<\/p>\n In addition to endless first home buyers’ schemes<\/a>, there have been repeated calls to give first home buyers access to their superannuation for a deposit.<\/p>\n Even APRA has come under pressure to abandon or decrease its mortgage serviceability buffers<\/a>.<\/p>\n These were implemented to specifically limit risky lending by ensuring borrowers could repay loans if rates suddenly rose.<\/p>\n National home prices have continued to climb over 2025. (AAP: Dan Himbrechts)<\/p>\n Pulling on the handbrake<\/p>\n Our banks have grown fat on the back of the housing boom. And they would very much like it to continue.<\/p>\n Mortgage lending is far and away the biggest money spinner among our big banks.<\/p>\n The biggest, Commonwealth Bank, now holds around a quarter of all home loans across the country.<\/p>\n Worth more than $600 billion, that’s a huge exposure to one sector at just one institution.<\/p>\n Loading<\/p>\n Not that there are any signs of imminent trouble.<\/p>\n Our banking system sailed almost unscathed through the worst inflationary bout in 50 years, which backed straight into a cost-of-living crisis and an incredibly steep rate-hiking cycle.<\/p>\n Despite all that, default rates remain incredibly low, a little over 1.1 per cent, and are trending down as three rate cuts have delivered welcome relief to strained household budgets.<\/p>\n<\/p>\n