Australia Not Too Impressed With US Definition Of Standards

Publish date:

The Reserve Bank of Australia says the land down under simply has higher standards and that is what set its apart from the US. While you might think the RBA was talking about how Amanda Drury measures up to some of her in-house competition, the topic at hand was actually lending standards and the country's ability to avoid the full brunt of the economic crisis. But the US is not a country that takes kindly to being told it has no standards. We set the standard- the global standard. So your reasons for believing you've got superior benchmarks had better be good.

Lending standards were higher here, with the banks largely avoiding the subprime borrowers that lit the fuse of the financial crisis in the US.
Interest rates, as well, did not reach the low levels that put home ownership within reach for many people offshore who had limited repayment capacity. Australian mortgages are also full recourse to the borrower, and the legal environment puts a stronger obligation on local banks to make responsible lending decisions.
Finally, the prudential regulator stress-tested mortgage portfolios and required more capital to be put aside for high-risk housing loans.

Congratulations. You're now 2-for-2.
Higher standards saved us, says RBA [The Australian]