Elliott, speaking at a conference in Australia earlier this week, said the scrutiny placed on lenders following the Royal Commission had affected banks' credit decisions.
He said responsible lending laws in Australia were "a little bit grey" in their language. The laws stipulate banks must take "reasonable steps" to make sure loans are "not sustainable".
The ANZ boss said there was a "risk-aversion" among Australian banks, which had "infected" most banks.
Elliott told the Aussie Home Loans 2019 Imagine Conference in Sydney: "I’d say the pendulum is swinging back, we’re becoming a little bit more normalised … but we’re still a long way from where we need to be. What we need is clarity. We want greater clarity from the regulators about that definition."
ANZ Group's mortgage book has contracted over the past year after the bank targeted lower-risk borrowers.
The influence of Australian regulators is widely believed to have an impact on New Zealand lending behaviour, with all of the big four lenders Aussie-owned.
In the wake of falling house prices, the Australian Prudential Regulation Authority relaxed serviceability rules for mortgage lenders. Lenders that were previously forced to test borrowers on a minimum 7% rate are now free to set their own servicing rate.
Westpac and ANZ have cut serviceability rates in Australia from 7% to about 5.5%-5.7% since the APRA move, but advisers say the shift is yet to have a meaningful impact on New Zealand's big four.
