Federal Treasurer Josh Frydenberg announced on Friday plans to overhaul responsible lending laws in a bid to allow banks to lend money to customers more easily.
He said responsible lending obligations had become too burdensome, limiting the number and speed of home loans approved during a recession when credit needed to flow more freely.
It comes just two years after the Financial Services Royal Commission put the banks in the public spotlight for questionable consumer lending practices, forcing tighter lending policies.
The Agency chief executive Matt Lahood said there was the potential that relaxed lending rules could push property prices up. “Initially it will [push up prices]. More buyers will attempt to get finance. I think it’ll spur buyers … if those people start getting approved then you’ve more buyers on more properties, then properties will be snapped up quicker which often pushes prices up,” he said.
“[The Treasurer] is trying to get the market moving again.”
Real Estate Institute of Australia president Adrian Kelly said the move would improve buyer demand, meaning prices have “less chance to fall”.
And Property Council of Australia chief executive Ken Morrison said the change “will help more Australians buy or invest in property”, adding that it would improve housing supply and affordability.
The peak bank lobby group Australian Banking Association also backed the proposal with chief executive Anna Bligh saying it struck the right balance between maintaining strong consumer protections while providing credit into the economy at a critical time.