SYDNEY, June 17 (Reuters) - Australia"s banking watchdog has asked the country"s big banks to give assurances they are lending responsibly and managing risks in their home loan books amid sky-rocketing house prices and signs of increased risky lending, regulators said Thursday. The Council of Financial Regulators also warned that it was discussing "policy options" that could be used to address risks if growth in household debt substantially outpaced that in income. The Australian Prudential Regulation Authority (APRA) was keeping a close watch on banks" lending standards, the council added in a statement. APRA forms the council alongside the Department of the Treasury, the Reserve Bank of Australia (RBA) and the corporate regulator. "APRA has written to the largest (banks) to seek assurances that they are proactively managing risks within their housing loan portfolios, and will maintain a strong focus on lending standards and lenders" risk appetites," the council said. Household debt in Australia, where wage growth has remained stubbornly low, is already one of the highest in the world at over 180% of income and over 120% of GDP. Near zero interest rates, a relaxing of prudential oversight over the past few years, and an enormous monetary expansion in the wake of the COVID-19 pandemic have already pushed house prices in capital cities to about 10% above their previous 2017 peaks. The council said, however, that overall lending standards in Australia were still "sound", and highlighted it was important that they remained so. "This is not the case at the moment, but the Council did discuss possible policy responses to a scenario in which rapid growth in household debt posed heightened risks to the future stability of the economy," RBA Governor Philip Lowe said in a speech on Thursday. Some options available to regulators included limits on loan-to-value rations, loan-to-income ratios, and restrictions on investor and interest-only lending, he said. Such options were not being "actively considered" yet, he added. Reporting by Paulina Duran in Sydney; Editing by Stephen Coates Our Standards: The Thomson Reuters Trust Principles.