Mr Keating associated this activity with the surge in Australia’s housing prices, particularly in the capital city markets.

“If I was treasurer today, I would be looking very hard at the whole entitlement or availability of debt to SMSFs. They have gearing available to them and, of course, many of them are taking the option of buying residential property,” Mr Keating said.

Speaking to SMSF Adviser, AMP Capital’s chief economist Shane Oliver said while SMSF borrowing is currently playing a relatively small role in the heated property market, “it’s probably not helping”.

“I think the longer the current rules remain in place, then more individuals will use their SMSF funds to gear into property,” Mr Oliver said. “So Paul Keating is right in alluding to an issue.

“I think there is a real risk there and it was never meant to be the case [that] superannuation investments were to be geared to this degree,” he added.

Mr Oliver said the treasurer should be looking at putting restrictions on borrowing in super, noting the inequities between SMSFs and APRA-regulated funds when it comes to leveraging capabilities.

“Now would be the time to do it rather than wait until it gets too big,” he said.

Since the FSI first sought feedback on restoring the prohibition on direct leverage of borrowing in super, speculation has mounted that the panel will recommend that borrowing in SMSFs be banned.

The SMSF Academy’s Aaron Dunn recently noted the default position of the panel in the Financial System Inquiry’s interim report suggests the panel believes superannuation is better off without leverage.

“It appears abundantly clear from the FSI panel and a range of submissions, including [those from] the Reserve Bank and big four banks, that the days are coming to a close for the use of leverage inside super,” Mr Dunn said.