Central banks from Scandinavia to Britain and New Zealand are sounding the alarm about soaring mortgage debt and trying to curb risky lending. In Australia, where borrowing is surging, regulators are just watching. Australian household debt was at a 25-year high, statistics bureau figures showed, and a government inquiry this month found housing to be a significant source of risk to the financial system. The average mortgage is at least four times household income in almost 80 per cent of the country, research by Digital Finance Analytics shows. While Britain, Denmark and New Zealand introduce measures including loan limits, caps on interest-only mortgages and repayment tests, the Reserve Bank of Australia and the country's banking regulator are holding their fire, saying risky loans have not increased significantly. "If we think there is a need for higher construction, which we do, an environment of declining prices is probably not conducive to that outcome," Reserve Bank governor Glenn Stevens said. "Some pick-up in housing prices as a result of lower interest rates was to be expected." Australia had the third-most overvalued housing market on a price-income basis, after Belgium and Canada, the International Monetary Fund said. In Sydney, where price growth has been the strongest, values soared 15 per cent over the past 12 months. That compares with a 5.4 per cent increase in New York City in April from a year earlier and a 26 per cent jump in London in the June quarter. "There's definitely room for caps on lending," said Martin North, principal at Digital Finance Analytics. "Global house price indices are all showing Australia is close to the top, and the [Reserve Bank] has been too myopic in adjusting to what's been going on in the housing market." Australian regulators were hesitant to impose nationwide rules as only some markets had seen strong price growth, said Kieran Davies, chief economist at Barclays in Sydney. Home values in cities including Adelaide, Hobart and Canberra rose less than 3 per cent over the year to June. The central bank has reduced its benchmark interest rate to a record-low 2.5 per cent to aid a recovery in non-mining industries, including residential construction, as the country's resources boom slows. The interest rate cuts and subsequent home price gains had helped building approvals climb 14 per cent in May from a year earlier, the Australian Bureau of Statistics said. The average rate on variable mortgages, which about 85 per cent of Australians borrowers are on, is 5.95 per cent, the lowest since September 2009. Australians owed almost 1.8 times their 2013 pre-tax disposable incomes, higher than Canada, France, Germany, Italy, Japan, Britain and the United States, the statistics bureau said.