Loan limits: the IMF’s solution to rising house prices

The International Monetary Fund has a suggestion for the Reserve Bank to counter the rising house prices without having to raise rates – set up lending limits for home loans.

With banks now having the ability to play around with economic tools that allow them to offer varying loan types, IMF managing director Christine Lagarde has stated that that ”The Australian Central Bank, under the strong leadership of its governor, will able to deal with it.”

Banks have yet to comment on the situation, as loan limits will eventually require the Big 4 banks to increase their capital, as the chances of a taxpayer funded bailout are reduced and will require the banks to raise more money – significantly reducing their profitability.

Read more about this on the Yahoo Finance website.