The banking regulator accepts it will get blamed for mortgage rate hikes by the big banks but says fierce competition between the major lenders was one of the factors that made intervention necessary.
NAB and ANZ on Friday joined Westpac and Commonwealth Bank in raising standard variable rates in response to the Australian Prudential Regulation Authority's imposition of stronger capital rules.
NAB's announcement came while APRA chairman Wayne Byres was being quizzed by federal parliament's house economics committee.
"The finger is being pointed at us as a cause," Mr Byres told the committee in Canberra.
There were a range of factors that have made it necessary to force banks to reduce leverage, he said.
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Many were beyond the banks' control, but some were a result of competition driving banks to lend too much.
"It's house prices, it's household debt, historically low interest rates, subdued income growth and strong competition; and it's that mix that's creating an environment of heightened risk," Mr Byres said.
APRA was urging lenders and borrowers to act responsibly while negotiating loans, and work out whether they could afford the RBA cash rate returning to a normal 6-7 per cent from its current all-time low of 2.0 per cent.
"We were saying (to banks) `we'd like you to say yes less frequently to new customers'. We were focused on the volume of new lending," Mr Byres said.
"Some banks have applied interest rate increases to new and existing customers, some banks have just applied it to new customers, some banks have actually done the opposite and applied it to existing customers and not to new ones, which is not what we were advocating."
Treasurer Scott Morrison was among those to criticise Westpac when it hiked its variable rates by 0.2 percentage points last week, contending that the rise was in excess of what he had been told was necessary.
Commonwealth Bank will raise its rates by 0.15 percentage points, while NAB has opted for 0.17 and ANZ 0.18.
Mr Byres said APRA's estimate that the capital rules could add about 10-15 basis points to lending rates had been based on banks raising rates across all their home loans. They have so far chosen to leave fixed rates unchanged.
He also pointed out that big lenders typically discount rates for borrowers with a good credit risk.
"I don't want to be an apologist for them, don't get me wrong, but they are all making commercial decisions," Mr Byres said.
APRA remains on alert over deteriorating credit standards amongst the nation's mortgage lenders, as growth in investor lending moderates in the face of stronger growth in lending to owner-occupiers.
