The Reserve Bank of Australia (RBA) was concerned about surging home prices in December last year, before the financial regulator and the RBA announced measures to dampen property speculation, according to The Australian Financial Review.
According to internal documents obtained by the AFR, the Reserve Bank's Michael Robson said the unprecedented nature of directing a 10 per cent limit on investor lending growth "increased uncertainty", but that "the costs of inaction may be very high", said the report.
In December, the RBA and the Australian Prudential Regulation Authority announced the measures to curb investor lending, which has since jumped 21 per cent in the year through to March, to contain financial stability risks.
The internal RBA documents, disclosed under Freedom of Information laws to the AFR, showed that RBA officials had noted that households' exposure to risks of rising interest rates was increasing, and that property price growth was more a risk to the health of household finances than for bank's balance sheets.