Non-bank lenders to return, standards could be relaxed says RBA

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Non-bank lenders are likely to return to the market as the economy improves but lending standards could become more relaxed, the central bank says.

Opportunities were beginning to emerge for smaller players even though there was still less lending activity in the non-banking sector than in the years before the financial crisis, Reserve Bank of Australia (RBA) assistant governor (financial markets) Guy Debelle told a Senate committee in Sydney on Monday.

“I suspect that sector will start to pick up as the economy improves,” Dr Debelle told the Senate Economics Reference Committee public hearing on the access of small business to finance.

“I would think we would see increased competition, in large part because we’re looking at an economy which is growing pretty well with some pretty good opportunities.”

Dr Debelle said “there is a reasonable chance” that lending standards would become more relaxed “if the economic outlook continues to improve”, in reply to a question from the committee.

The RBA lifted the cash rate last week by a quarter of a percentage point to 4.25 per cent in an effort to further rein in expansionary pressures.

It was the fifth monthly interest rate rise by the central bank since October last year.

Dr Debelle said the RBA was not trying to force down demand by steadily lifting the cash rate.

“We’re not trying to depress demand, we’re trying to make it (the economy) grow at a sustainable pace,” he said.

“It’s still growing, but we’re trying to ensure it grows at a sustainable pace which has, in the past, proven to be the best for the economy as a whole.”

AAP

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1 COMMENT

  1. I dont know if Dr Debelle has tried to read the requirements for national legislation, or if infact he or any of his family have tried to get a home loan lately from anywhere but a bank. In fact memories being short, I might remind Dr Debelle that 4 years ago when his driver was taking him to the RBA meetings, had the radio been on, he might have heard 10 or 15 mortgage adds between his Bellvue Hill appartment and Macquarie St. Does’nt he wonder where all the adds are gone?

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