Regulators were prepared to step in again if more risks emerged in the housing market according to the RBA. Picture: AAP Image/Dean Lewins

Michele Bullock, RBA assistant governor financial system said the “essence of macroprudential policy is that prudential supervisors recognise potential system-wide risks in their supervision of individual institutions and react accordingly”.

She said regulators were continuing to monitor ongoing effects of housing risks “and are prepared to do more if needed”.

RBA Assistant Governor Michele Bullock seen here in a file picture with the new Australian $5 note and the old Australian $5 note. Picture: Britta Campion/The AustralianSource:News Corp Australia

Ms Bullock said three years ago Australian regulators saw risks building in the residential housing market, particularly off rampaging investor activity.

“The regulators judged that more targeted action was needed to address the risks – to put a bit of sand in the gears.”

APRA tightened a number of aspects of its supervision, including a benchmark 10 per cent investor housing lending limit, guidelines for serviceability assessments and higher scrutiny of lending practices.

“ASIC also undertook a review of lending with a focus on whether lenders were complying with responsible lending obligations,” she said.

“There is no doubt that the actions did address some of the risks. Nevertheless, the early experience suggests that, while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time. We are continuing to monitor their ongoing effects and are prepared to do more if needed.”

Originally published as RBA ready to act on housing risk