RBA chief urges borrowers not to over-extend
RBA Governor Glenn Stevens has indicated that while he is not concerned about the current surge in housing pricing, borrowers should not over-extend themselves.
Speaking at a Citi Group Investment Conference, Mr Stevens said that some rise in housing prices is part of the normal cyclical dynamic but that is is very important that strong lending standards remain in place, and that decisions be based on sensible assumptions about future returns.
"That's what we need if we are to experience a long and sustainable expansion in housing investment that houses our growing population at acceptable cost, and pays reasonable returns on the capital deployed."
"That's the sort of outcome we want, as part of the more balanced growth path for the economy we are seeking over the years ahead."
Home loan interest rates are currently at historical lows and in cities like Sydney where investment lending is up 40% there have been concerns of a housing bubble.
Borrowers are being urged to factor in potential rate rises into their repayment scenarios when considering any property purchase. To see how much difference a rate increase will make to your monthly repayments try Mozo's rate change calculator.