Australia's banking regulator says the country's housing market is in an environment of "heightened risk", but he won't say there's a housing bubble.
Australian Prudential Regulatory Authority chairman Wayne Byres told a Sydney conference that he wouldn't use "the B-word" to describe the housing market.
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"I don't use the B-word. I refuse to use the B-word. It implies a binary, that's too simplistic," Mr Byres said speaking at the Australian Securities and Investments Commission annual forum.
"We are in an environment of heightened risk. House prices are high and particularly in this one (Sydney) they're rapidly rising," Mr Byres said.
"If everyone is not careful the risks are going to rise," Mr Byres said.
Mr Byres said APRA was watching the housing market, but he stopped short of saying the authority would bring in new curbs on investment lending.
APRA has already limited the growth of investor loans for each bank to 10 per cent a year and Treasurer Scott Morrison has flagged some restrictions on investor loans in the May federal budget.
His comments came after the chairman of the Australian Securities and Investments Commission chairman Greg Medcraft warned of a housing bubble earlier at the forum.
Mr Byres also said that it was understandable that some of the big banks raised rates for some home loans after curbs were placed on investment loans and loans for foreign investor, saying it was a "choice they can make".
Last week, Westpac and National Australia Bank lifted interest rates on some home loan products. The interest rate rise was the highest for investor interest-only loans.
"That's a choice they can make," Mr Byres said.
"We are putting a quantity limit on a good and whenever you put a quantity amount on a product you have a price impact," Mr Byres said.
I don't use the B-word. I refuse to use the B-word.
APRA chairman Wayne Byres
Mr Medcraft has stronger words for the mortgage market in Australia.
"I think the residential mortgage market is disgraceful in this country," Mr Medcraft said.
"The corporate sector abandoned prime rates a while ago," he said.
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