The Westpac case “sends a message to the broader sector” that ASIC is prepared to “take anyone on,” Chairman Greg Medcraft told a parliamentary committee in Canberra.
On Wednesday, ASIC announced proceedings against Westpac, Australia’s second largest bank, over alleged failures to properly assess whether borrowers could afford their mortgages. Westpac said it would defend the case, reiterating its commitment to responsible lending.
Michael Saadat, senior executive at ASIC, informed the same parliamentary committee that the regulator expected to make an announcement within the next couple of weeks on its discussions with other banks.
The civil court proceedings against Westpac follow a 2014-2015 probe into lending standards on interest-only mortgages issued by 11 lenders, including those issued by the Big Four.
There is growing concern among politicians and regulators about the foundation of Australia’s soaring housing market. The latest data from CoreLogic shows that Sydney home prices soared 18.4% in the year to February, the fastest annual pace in 14 years.
Amid pressure from APRA, banks have been curbing their lending to property investors and cutting back on riskier interest-free or low-documentation housing loans.
On Thursday, APRA Chairman Wayne Byres told the committee that some lenders were very close to breaching its 10% speed limit on mortgage lending growth to investors.
Monitoring the housing market remains high on APRA’s priority list. “We can be more confident in the conservatism of mortgage lending decisions today relative to a few years ago,” Byres said.
