Caution list from the Reserve Bank of Australia

Extracts from: 

FINANCIAL STABILITY REVIEW | MARCH 2015

1. "Risks in housing and commercial property markets are rising in association with fast price growth in some cities, heightened investor activity and strong price competition among lenders. It will be important for macroeconomic and financial stability that banks’ lending practices take into account system-wide risks in these property markets."

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 2."Risks appear to be rising in the commercial property market. Banks need to be cautious in commercial property valuations and in their loan-to-valuation ratios (LVRs) given that prices are rising strongly."

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3. "Banks’ housing loan performance continues to be aided by low interest rates, which ease the debt-servicing requirements of borrowers. Rising housing prices have also contributed by making it easier for home owners to sell rather than stay in arrears should they run into servicing difficulties, and for banks to dispose of their existing stock of troubled housing assets.  "

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4." Risks in shadow banking – defined as credit intermediation involving entities and activities outside the prudentially regulated banking system .  The shadow banking sector in Australia is estimated at around 4 per cent of financial system assets, having declined markedly since the financial crisis."

Without risk or responsibility