APRA still discussing mortgage options THE banking watchdog has yet to decide what additional action it may take to curb the flood of demand from investors for mortgages. EARLIER this year, the Reserve Bank expressed its concerns that investor demand was "unbalanced" when it came to housing loans and was fuelling already strong house price rises in Sydney and Melbourne. Australian Prudential Regulation Authority chairman Wayne Byres told a parliamentary hearing the regulator continues to encourage banks and other authorised deposit-taking institutions to undertake sound lending practises. Given the importance of the housing market to the banking system, APRA has issued a new prudential practice on residential home lending. It also remains in discussions with other agencies on the Council of Financial Regulators, that includes the RBA, to what additional steps might be taken. There has been speculation that so-called macro prudential measures might be implemented. Other countries have undertaken such measures, including caps on loan to valuation ratios in New Zealand and loan to income limits in the UK. "We are still working through our options," Mr Byres told the House of Representatives economics committee in Canberra on Friday. Those sorts of tools are unlikely to be the ones we reach for first. He said when the Australian system was more regulated, such measures didn't result in significantly better outcomes. Instead, any measures are likely to be more capital related to insure banks are adequately covered for the risks they are taking.