(Adds latest home prices figures, industry context)
SYDNEY, April 3 Australian regulators on Monday
launched a new attack against sky rocketing home prices as new
data showed property values in capital cities rising at their
fastest in seven years.
Australia's corporate watchdog said on Monday it was
launching a new round of industry surveillance to ensure banks
and brokers were not recommending overly expensive interest-only
loans to customers.
The move by the Australian Securities and Investments
Commission follows steps announced last week by the banking
watchdog, the Australian Prudential Regulation Authority, to
tighten rules on interest-only loans.
The measures highlight the pressure that Australian
regulators are under to cool red-hot property prices as record
low interest rates lead households into a debt binge.
"ASIC will shortly commence a surveillance to identify
lenders and mortgage brokers who are recommending high numbers
of more expensive interest-only loans," ASIC said.
The regulator also said that eight major lenders will
provide remediation to consumers who suffer financial difficulty
as a result of shortcomings in past lending practices.
Already, banks have jacked up mortgage rates on
interest-only loans - popular with property speculators.
Variable interest rates on investor loans from Commonwealth Bank
of Australia - the country's top mortgage lender - are
as high as 5.94 percent, compared with 5.25 percent for owner
occupiers and an official cash rate of 1.5 percent.
Data out on Monday from property consultant CoreLogic showed
home values in Sydney jumped an annual 18.9 percent while those
in Melbourne surged 15.9 percent. Canberra and Hobart were also
racing at 12.8 percent and 10.2 percent respectively.
"We can expect lending conditions for investment purposes
will tighten," said CoreLogic head of research Tim Lawless.
"Additionally, higher mortgage rates handed down by
Australia's major banks may contribute towards cooling some of
the exuberance being seen in the largest capital city housing
(Reporting by Wayne Cole and Swati Pandey; Editing by Richard
Pullin and Eric Meijer)