It’s the Reserve Bank of Australia’s job to worry, and it’s not just the housing market it’s worried about – lending to business is also on the central bank’s radar.

The RBA has a responsibility to keep the economy ticking over, using interest rates to keep inflation corralled and unemployment low.

But it’s also responsible for the stability of the financial system.

The financial crisis of 2008 was a reminder that a financial system in chaos means kissing goodbye to those other economic goals.

The half-yearly review shows the central bank is pretty happy with the way things have gone so far.

Australian banks have strengthened their balance sheets, profitability is strong, and bad and doubtful debts, already low, have declined further, it said.

But the RBA is less concerned with congratulating itself than with avoiding the next crisis.

The obvious pressure point is the booming housing market.

Competition to attract new borrowers has intensified, the RBA said.

Lending rates have fallen, discounts are bigger and more widely available, there are fee waivers, upfront cash bonuses and vouchers, and broker commissions are bigger.

So far, though, lending standards don’t appear to have fallen overall.

But the RBA asked whether lending practices are “conservative enough for the current combination of low interest rates, strong housing price growth and higher household indebtedness than in past decades”.

Echoing the minutes of the September 2 board meeting, released last week, the RBA said risks extended beyond the banks.

“The Reserve Bank’s assessment is that the risk from the current strength in housing markets is more likely to be to future household spending than to lenders’ balance sheets,” it said.

Even so, the RBA warned, the risks to the banks themselves would build “if current rates of growth in investor lending and housing prices persist, or increase further”.

But it’s not just lending for housing.

The proportion of business loans that are impaired – that is, payments are past due or not being made – has fallen since 2009, something the RBA puts down to better economic and property market conditions, and tighter standards since the crisis in 2008.

Banks should not squander these gains by “an imprudent loosening of lending standards from their current configuration, especially given that the bulk of bank credit losses in Australia have historically occurred in business lending”.

The RBA said banks should make sure their loans can still be serviced if interest rates rise or if the economy sags.

“Furthermore, banks should be cautious in their property valuations, and conscious that extending loans at constant loan-to-valuation ratios (LVRs) can be riskier when property prices are rising strongly, as is currently the case in some commercial property and housing markets.”