In yesterday's ASIC annual forum, Wayne Byres, chairman of the Australian Prudential Regulation Authority, was asked about the Big Four banks' behaviour, in the context of their respective appearances before the House of Representatives couple of weeks ago. Also discussed was the fact that, since the US Federal Reserve is on rate raising cycle, two of those Big Four banks have anticipated the likely follow-on in offshore funding costs, and lifted some of their own mortgage interest rates. And, given that some banks have almost entirely pulled back from providing investor loans, it's almost a free kick to other banks to put up interest rates, said Ticky Fullerton, the panel moderator. Byers responded: "That's a choice they can make and clearly we are putting a quantitative limit on a good and when that's done there is a range of responses - potentially a price response." He said customers had choices and the fact that the banks, "particularly in the investor area", were able to put through price changes suggested that either consumers would move to another institution or "demand is so strong that there isn't that capacity. If demand is that strong, that's one of the reasons we have the benchmarks here in the first place." He said APRA was "looking at the market and we have various tools available to us and can be ready to use if needed. "The fact that we are seeing tightening terms and conditions and are seeing pricing changes is a natural response from the system. "If that wasn't a benchmark [the banks] are actually adhering to then we wouldn't see those responses. "It is not our job to determine house prices. Our job is to keep bank balance sheets robust whether or not the property market goes up, down or sideways.  "What we try to do is reinforce lending standards and make sure that good quality credit is written, borrowers get loans they can afford and banks have a reasonable prospect of getting their money back and the system is properly capitalised," Byers said.