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Debate erupts over no-deposit home loans

Staff Reporter 4 minute read

While more lenders continue to reintroduce lending up to 95 per cent, the industry remains at odds over whether or not we will see the return of no-deposit home loans.

Genworth’s acting chief executive officer Paul Caputo told The Adviser that he couldn’t see either Genworth or the industry moving back to 100 per cent LVR anytime in the near future.

“One thing we learnt from the GFC was that borrowers perform better when they have some level of savings. Their behaviour is very different to those that have no savings at all. In this respect, I don’t think we are going to see the industry move back to 100 per cent LVRs in the near future,” Mr Caputo said.

But while Mr Caputo believes the industry will be happy to offer a maximum LVR of 95 to 97 per cent, it seems not everyone agrees.


Speaking at the JP Morgan and Fujitsu Australia Mortgage Industry Report media briefing yesterday, Firstfolio chief executive Mark Forsyth said while the industry is wary of moving back into the 100 per cent LVR space, there is always going to be one lender that wants to “ruffle some feathers”.

“As much as various lenders say they are not trying to claw market share, the reality is that is exactly what they are trying to do and there will be one lender that will make the move to 100 per cent LVR in a bid to stand out from the pack,” Mr Forsyth said.

But even if lenders do decide to move back into the no-deposit home loan space, Mr Forsyth said the requirements on the loans would be so extreme that they would be almost impossible to obtain.

“Adelaide Bank announced it will reintroduce lending up to 95 per cent LVR, but each borrower has to meet a lot of requirements before they are entitled to the higher LVR,” he said.

Last month, Adelaide Bank announced that the new loan to value ratio would only be available to owner occupiers via the bank’s third party channel and mortgage managers.


Debate erupts over no-deposit home loans
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