The global financial crisis has killed the no deposit mortgage, as lenders continue to tighten lending restrictions under the higher cost of funds.
According to a report by RateCity, Australian lenders no longer offer 100 per cent loan-to-value ratio (LVR) home loans.
However, in mid-2008 more than 650 home loans offered a 100 per cent LVR.
RateCity also found only 20 loans currently offer 98 per cent LVR; while there are 89 loans offering 97 per cent LVR compared to 355 in 2008.
The company’s chief executive officer Damian Smith said Australians needed to prepare for even tougher lending restrictions this year.
“While the Australian economy is fairing much better than many other countries, our mortgage market is still impacted by offshore lending markets because many financial institutions borrow funds from other countries,” Mr Smith said.
Credit Union Australia’s chief executive Chris Whitehead told The Australian Financial Review that 100 per cent LVRs were unlikely to return in the next few years as they reflected a level of confidence in housing prices that had since subsided.
“LVR tightening reflects their [the banks] cherry-picking of certain customers, which a lack of competition has made possible,” he said.
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