Rising risks in Australian banks remain manageable 26 February 2015 5:46PM Rohneel Kumar Fitch Ratings has warned that a further reduction in the cash rate may fuel further house-price appreciation - in particular, growth in investor and interest-only loans.This, in turn, would increase the likelihood of regulators implementing macro-prudential tools to "influence the banks' risk appetite".Nonetheless, the report released yesterday said Australian banks remained well positioned against what Fitch called "the remote risk of major mortgage losses in the medium-term".Fitch said the potential for significant losses in Australian bank mortgage portfolios remained low despite an increase in risk, with business loans the most likely source of losses in the first iteration of a stress scenario.Some risks are easing, though. Fitch said the proportion of 90 per cent loan-to-value ratio mortgages was moderating, while borrowers continued to take advantage of low rates to pay down mortgages ahead of schedule.In addition, annual house price growth was moderating and growth was expected to decline to four per cent by the end of 2015, Fitch said."Some of these trends have elicited a regulatory response, with both the Australian Prudential Regulation Authority and the Australian Securities and Investment Commission announcing reviews of bank mortgage lending in December 2014," Fitch pointed out."APRA is increasing oversight on higher-risk mortgage lending, investor loans, and borrower-affordability testing, while ASIC is examining whether interest-only loans have been mis-sold to owner-occupiers," Fitch said.