Bank confidence in property returning as more lenders relax borrowing rules
Mortgage lenders continue to relax lending criteria as they become more confident in the Australian residential property market.
Loan-to-value ratios (LVRs) indicate the proportion of a property’s value a bank is willing to lend.
Last month some non-bank lenders started raising their LVRs and I noted that it was going to be interesting to see if the major banks would follow. It would test how confident they were in the strength of the property market.
In the last couple of weeks we have seen their response as Westpac and ANZ raised their LVRs.
BankWest head of mortgages Dean Gillespie was quoted in AFR as saying “the changes reflected the banks’ view that the outlook for property was good.”
To put these moves into context, before the GFC, 654 lenders were prepared to lend 100% of a property’s value. About 355 offered 97% LVRs.
After the GCF, no lender offered 100% LVRs and 54 offered 97% LVRs.
Recent Full-doc lending changes include:
- Westpac raised its LVR for new customers from 87% to 92% and maintained LVRs for existing customers at 97%
- ANZ raised its LVR for those who pay lenders mortgage insurance (LMI) from 90% to 92% for new customers and moved the LVR for existing customers from 95% to 97%.
Funding for the low doc market is also opening up, which is good news for the self-employed…
Recent Low-doc lending changes include:
- Wholesale lender Advantedge has removed the need for borrowers to pay LMI for 60% and 70% LVR loans, as well as the need for 6 month BAS statements.
- Homeloans Ltd followed this and announced it will cover the cost of LMI on its range of low doc loans on LVRs up to 70%.