Australia home price surge may tighten lending

[SYDNEY] Banks may tighten lending standards and buyers turn cautious if a surge in Sydney house prices spreads to other capital cities in Australia, the country head of the nation's third-largest lender by market value said.

"These price rises are there because of the very low level of interest rates and we need to be mindful of what's going to happen as rates rise," Philip Chronican, chief executive officer for Australia & New Zealand Banking Group's Australian operation, said last Thursday.

"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."