Frydenberg defends lending rules

The Treasurer has defended the impact of prudential intervention in the housing market.

Treasurer Josh Frydenberg. Picture: Kym Smith

Josh Frydenberg has defended the prudential intervention in the housing market as having opened opportunities for first-home buyers, as he described Labor’s negative gearing proposals as “ill-suited for the times”.

The Treasurer yesterday pointed to official figures, released last month, showing the largest number of first-home buyers taking out loans since 2009.

“After being squeezed out of the market during the Rudd-­Gillard years, we are now seeing a welcome increase in the number of first-home buyers,” he said.

It comes after the Treasurer called on the nation’s banks to keep their books open amid criticism that tighter lending standards were contributing to the worst fall in Australian property prices since the global financial crisis. The weakening housing market follows the Australian Prudential Regulation Authority slapping restrictions on property investors and interest-only borrowers, and after banks reined in loose lending after being shamed for the practice during the royal commission.

“Over the last financial year, over 115,000 first-home buyers got a loan approval. This is the biggest number since 2009,” Mr Frydenberg said.

“This is due to a combination of factors including strong job growth for young people, APRA interventions which have helped change the housing dynamic from one of investor-led growth to owner-occupier-led growth, and government initiatives like the first-home super saver scheme which allows first-home buyers to build a deposit inside super,” he said.

Mr Frydenberg said the banks had a “social and economic responsibility to ensure affordable and accessible and timely loans” to the broader public. “It’s in the banks’ interests, it’s in the economy’s interest and it’s certainly in the public’s interest,” he said.

Mr Frydenberg also said Labor’s plan to grandfather negatively geared properties was designed in an environment where house prices were going up.

Opposition Treasury spokesman Chris Bowen accused Mr Frydenberg of “cherry picking housing market data as it suits him … He needs to take responsibility for everything that’s happened in the housing market.

“The main question for the Treasurer is what modelling was done on the impact that APRA’s macro prudential measures would have on house prices?

“Mr Frydenberg has some hide demanding banks open their lending books after he and Scott Morrison spent years backing measures that saw less investor lending,” Mr Bowen said.

Labor trade spokesman Jason Clare said it was important for banks to lend responsibly. “No one wants a repeat of some of the traumatic, terrible, almost corrupt things we’ve seen come out of the banking royal commission,” he said. “We want banks to lend to first-home buyers. We want first-home buyers to get into the market … We also want banks to act responsibly.”