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SYDNEY, March 14 (Reuters) - A top Australian central banker said on Tuesday said the calming effect of tighter rules on housing lending might be fading and regulators stood ready to impose more restrictions if necessary to head off risks in the market.
Reserve Bank of Australia (RBA) Assistant Governor Michele Bullock was referring to stricter rules on lending imposed by the Australian Prudential Regulation Authority over the past couple of years when rapid lending for home investment was pushing up prices.
"The regulators judged that more targeted action was needed to address the risks – to put a bit of sand in the gears," said Bullock, who heads the central bank's financial division.
"There is no doubt that the actions did address some of the risks," she added. Home prices did cool in the first half of last year while lending for investment slowed sharply.
However, in recent months lending has accelerated again while home prices in Sydney and Melbourne have climbed to new highs.
"The early experience suggests that, while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time," Bullock said.
"We are continuing to monitor their ongoing effects and are prepared to do more if needed."
The danger of a debt-fuelled bubble in housing is a major reason the central bank has resisted pressure to further cut interest rates, already at record lows of 1.5 percent. (Reporting by Wayne Cole; Editing by Alison Williams)