Get notifications in real-time for staying up to date with content that matters to you.
Spiralling average loan sizes and LVRs over the last three years could spell trouble for lenders, Moody’s reported yesterday.
Moody’s Investor Services Trends in Australian RMBS Collateral: 2004-2007 report identified some deterioration in the performance of Australian residential loans.
It highlighted NSW and specifically South-western Sydney as the main contributors.
“There has been a gradual shift to higher LVRs with the 2007 origination vintage including a significant percentage of loans with an LVR above 95 per cent,” Moody’s assistant vice president and report author Ilya Serov said.
Mr Serov said the increase in higher LVRs was a concern because of the high correlation between delinquency and LVRs.
Moody’s however did believe that the risk to the industry will be mitigated by lower loan volumes from the non-bank sector.
“In the wake of the global credit crisis, lenders, especially in the non-bank space are finding it difficult to access funding… As a result, we see some of the trends towards higher LVRs and looser underwriting reversing in the short-term as origination is cut back,” said Mr Serov.
Published: 18-06-08
Major bank overhauls assessment process
A big four bank has bolstered its assessment team and will priori...
Industry reacts to cash rate decision
The Reserve Bank of Australia has announced its decision to leave...
Ignorance of extended asset write-off a boon for brokers
More than a third of SMEs are unaware of the extended instant ass...
The number one magazine for mortgage brokers
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Receive breaking news direct to your inbox each day
