The Federal Treasurer wants banks to take the foot off their lending clampdown for the benefit of the public.
Josh Frydenberg is concerned about the effect of the banking royal commission on the slowing property markets in Melbourne and Sydney.
Commissioner Kenneth Hayne will release his final report early next year and Mr Frydenberg is hoping to stave off any further tightening in lending for homebuyers, small businesses and borrowers.
“I would encourage the banks when it comes to lending, in particular for small business, make sure you get the balance right, keep the books open and don’t lose sight of the broader public good,” Mr Frydenberg told Australian Financial Review.
“We all know the royal commission has brought into focus the issues of responsible lending and examples of misconduct.”
“While both issues are important, I do see them to some extent as separate, with different responses required.”
Housing loans for both investors and owner-occupiers fell sharply in September.
Treasurer Frydenberg says the housing credit growth figure of 4.5 per cent since mid-2017 was almost half the rate seen less than three years ago and it was being driven by a slowdown in lending to investors.
“In the words of the RBA, housing credit conditions are tighter than they have been for some time,” he said.
“Credit for small business is also getting harder to obtain.”
“At a time when businesses are growing and over 1 million jobs have been created, we don’t want the availability of credit to hold back the economy,” he told AFR.
“Great care needs to be taken around any further changes to responsible lending in order to prevent an unnecessarily restrictive approach to credit.”
