Wayne Byres, chairman of the Australian Prudential Regulation Authority launched into a key topic at the Australian Securitisation Forum's annual conference: lending for housing.This was, he explained, the main asset class for securitisation in Australia.Indeed, it's the main asset class for the whole banking sector: housing loans represent over 60 per cent of total lending within the banking sector."Our goal has been to ensure APRA-regulated lenders are making sound credit decisions which are appropriate, individually and in aggregate, in the context of broader housing market and economic trends," Byres said.He warned of the risks of being in a period where household indebtedness is high - with a trajectory to clearly rise further - underpinned by a sustained period of historically low interest rates, subdued income growth, and high house prices. "In short, heightened risk requires heightened vigilance: certainly by APRA, but also - and preferably - by lenders (and borrowers) themselves," he said.Byres then warned: "It's important to note that APRA can only influence the terms and price at which credit is supplied. We cannot influence the underlying demand. Actual lending outcomes will be a product of both, so I do not want to be seen to suggest that all of the trends that I am about to discuss are solely attributable to APRA."Areas that Byer identified as "in need of improvement" included: •    estimates of borrowers' living expenses; •    an over-reliance on less stable sources of income; •    the presumption that interest rates would remain very low for a long time; and•    inadequate enquiry around borrowers' existing debts. He was ready to claim victory on one aspect: "Aggregate housing credit is now growing a little over six per cent: not that different from its growth rate before we introduced our industry-wide investor growth benchmark in 2014. "But it is clear that the strong growth in lending to investors has been curtailed. The emerging imbalance called out by the Reserve Bank in its September 2014.""Overall growth in credit to investors is now more in line with that to owner-occupiers. …""We have also had the added benefit that lenders have been forced to improve their management information systems, which in the absence of any regulatory requirements had grown lax in identifying the purpose for which money was being borrowed."Byres said APRA's March announcement that APRA-regulated lenders should limit their new interest-only lending to no more than 30 per cent of new lending funded during a given quarter had had an immediate and notable impact.Byres also noted the effectiveness of limiting the growth of interest only lending, which had been running at between 40-50 per cent of new lending for some time. It accounted for about 23 per cent of total new lending for the quarter ended September."Further, data on loans in warehouses funded by ADIs shows that non-ADI lenders have not materially increased their share of interest-only lending in recent months, which provides some comfort that the decline is not the product of interest-only borrowers switching to non-ADI lenders," he said."In