The Australian Prudential Regulation Authority has worked on implementing regulations to ensure healthy lending standards in the country, as it tries to avoid following the footsteps of other major countries that headed towards the dreaded property bubble.
The major challenge, according to APRA is how major banks respond to the current financial situation, as borrowers are taking advantage of the low interest rates. One cause for concern is that loans with 90% loan to value ratio increased to 14.1%, the highest level since the 2009 Global Financial Crisis. Loan repayments are also a cause for concern in case of a possible interest rate hike.
Although these are major concerns, Australians can breathe a sigh of relief as the nation stands on a current financial situation where the low interest rates are offset by increasing property values. the US Federal Reserve is also keeping markets in balance as it pushed back on its stimulus program, strengthening the US dollar and keeping all the other currencies at a stable rate, including the Australian dollar.
Read more about this on the Age website.