(Adds latest home prices figures, industry context)
SYDNEY, April 3 (Reuters) - Australian regulators on Monday launched a new attack against sky rocketing home prices as new data showed property values in capital cities rising at their fastest in seven years.
Australia’s corporate watchdog said on Monday it was launching a new round of industry surveillance to ensure banks and brokers were not recommending overly expensive interest-only loans to customers.
The move by the Australian Securities and Investments Commission follows steps announced last week by the banking watchdog, the Australian Prudential Regulation Authority, to tighten rules on interest-only loans.
The measures highlight the pressure that Australian regulators are under to cool red-hot property prices as record low interest rates lead households into a debt binge.
“ASIC will shortly commence a surveillance to identify lenders and mortgage brokers who are recommending high numbers of more expensive interest-only loans,” ASIC said.
The regulator also said that eight major lenders will provide remediation to consumers who suffer financial difficulty as a result of shortcomings in past lending practices.
Already, banks have jacked up mortgage rates on interest-only loans - popular with property speculators. Variable interest rates on investor loans from Commonwealth Bank of Australia - the country’s top mortgage lender - are as high as 5.94 percent, compared with 5.25 percent for owner occupiers and an official cash rate of 1.5 percent.
Data out on Monday from property consultant CoreLogic showed home values in Sydney jumped an annual 18.9 percent while those in Melbourne surged 15.9 percent. Canberra and Hobart were also racing at 12.8 percent and 10.2 percent respectively.
“We can expect lending conditions for investment purposes will tighten,” said CoreLogic head of research Tim Lawless.
“Additionally, higher mortgage rates handed down by Australia’s major banks may contribute towards cooling some of the exuberance being seen in the largest capital city housing markets.” (Reporting by Wayne Cole and Swati Pandey; Editing by Richard Pullin and Eric Meijer)