The Council of Financial Regulators has identified signs of increased risk taking by lenders recently and is seeking assurance from lenders that they are managing the risks in their mortgage portfolios.

The CFR released a statement yesterday, following its latest quarterly meeting, noting that housing credit growth has picked up and is expected to increase further in coming months.

With housing markets strong and investor activity growing, the CFR said APRA has written to the largest ADIs seeking assurance about the risk management of their housing loan portfolios.

The CFR said its members are also paying close attention to the implications of trends in household debt. They discussed policy options that might be used if growth in household debt substantially outpaces income.

In a speech yesterday, Reserve Bank governor Philip Lowe said this was not the case at the moment.

Lowe said household balance sheets were in good shape, following the big increase in the savings rate last year.

“While the savings rate has since declined as restrictions have eased, it remains high by historical standards,” he said.