The end may be nigh for major bank loans over 90 per cent loan to value ratio with the news that the Commonwealth Bank has followed ANZ and dropped its maximum LVR to 90 per cent.
Already effective as of Monday this week, all new CBA customers will only be able to borrow up to 90 per cent of the purchase price. New borrowers will also be required to have 5 per cent genuine savings if the LVR is greater than 85 per cent – up from the 3 per cent requirement announced at the beginning of March.
Existing CBA customers will still be eligible for a LVR of up to 95 per cent, where they have a strong credit history and are not refinancing other financial institution debts.
Kathy Cummings, CBA executive general manager of third party banking, told Mortgage Business the move was a “prudent measure” to ensure the bank remained “a responsible lender”.
“Our experience tells us that customers who have 5 per cent genuine savings and/or have a maximum LVR of 90 per cent are more likely to be able to manage their repayments better.”
ANZ was the first of the majors to lower its maximum LVR to 90 per cent in November last year, attributing weak economic forecasts for 2009 to its decision. Citibank and ING DIRECT also reduced thier maximum LVR to the same level in March this year.
Westpac and NAB continue to offer LVRs of up to 95 per cent with genuine savings requirements also now in place.
St George has also announced that its no deposit home loans will disappear as of April 10.
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