Australian finance industry regulators are unlikely to set strict rules for mortgage underwriting, such as maximum loan-to-valuation ratios, a senior Reserve Bank executive said yesterday.The RBA's head of financial stability, Luci Ellis, said there has been a lot of talk in international "macroprudential" policy forums about stricter mortgage lending standards.Ellis said the RBA's position was that it was important that borrowers put some of their own resources into a home loan but it did not think mandating LVR caps and other rules were warranted.Speaking at the RFi Australian Mortgage Conference in Sydney yesterday, Ellis said: "I do not see evidence of lax lending standards in Australia."However, there is no capacity for lenders to be less prudent. We are not in that world any more."House prices are not going to be running ahead of income growth. That is a permanent state of affairs. House price growth will be slow. Income growth will be slow. "Debt does not erode in the way it used to and borrowers stay in the danger zone for longer."Ellis was part of a Financial Stability Board group that drafted a set of principles for sound mortgage lending practices. Those principles were released for consultation last year and will be finalised this year.Ellis said: "The FSB did not mandate or specifically encourage such a policy tool [LVR caps]. "Many factors affect a borrower's capacity to repay their loan. The focus should not be on maximum LVRs at origination, ignoring all other aspects of lending standards."In my view, capacity to service the loan is far more important."The FSB principles cover serviceability, loan term, amortisation, collateralisation and subordination.