Banks could tighten lending: report

Australia and New Zealand Banking Group says banks may tighten lending standards if a lift in Sydney house prices spreads to other capital cities, Bloomberg reports.

According to the publication, ANZ chief executive officer for Australia Philip Chronican said banks need to be mindful of what will happen as very low interest rates rise.

"We've already put in a buffer over and above current interest rates to allow for the fact that the borrower might have to be repaying in a higher interest-rate environment. So one of the tools is to increase the buffer," Mr Chronican told Bloomberg.

When interest rates start rising, house prices will stabilise as affordability falls, he told the publication.