Powered by MOMENTUM MEDIA
the adviser logo
Lender

Lenders slashing high LVR home loans: RateCity

by Reporter4 minute read
lvr home loan drop arrow down

The number of lenders offering low-deposit home loans has dropped by 44 per cent in the past three years, new RateCity research has revealed.

According to rate comparison website RateCity, 32 per cent of lenders on its database offer mortgages with a maximum loan-to-value ratio (LVR) of 95 per cent, down from 76 per cent in 2015.

RateCity spokesperson Sally Tindall noted that borrowers who typically sought low-deposit loans to break into the housing market may be faced with new challenges amid tighter credit restrictions and reduced appetite for small deposit loans from the Australian Prudential Regulation Authority (APRA).

“For Australians battling to crack into the highly competitive home loan market, low-deposit loans have been a doorway in. But the rules have changed and now borrowers that might have been given the green light three years ago are starting to be turned away,” Ms Tindall said. 

Advertisement
Advertisement

Ms Tindall observed that while buyers could have previously paid 5 per cent on a home loan (giving the example of $25,000 on a $500,000 mortgage), they are now required to pay an additional $75,000 in order to qualify for the same loan.

“These new LVR requirements will set a lot of potential buyers back, because they just don’t have access to that kind of money,” the spokesperson said, but added that there are benefits from increased credit scrutiny.

“Stretching yourself thin at record low interest rates can be a recipe for disaster,” the RateCity spokesperson said.

“It’s been over seven years since we’ve experienced a [Reserve Bank of Australia] rate hike and people have become complacent.

“These new LVR rules will sharpen the focus of [borrowers who are] serious about securing housing finance.”

[Related: Mortgagors ‘better off’ today despite high home prices: RateCity]

arrow down red

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Stephen Hale ta

MFAA launches near-prime, specialist loan resource

Coined Finance for when your customer doesn’t fit the mould: A broker’s guide to near-prime and...

READ MORE
Daniel Newell Gedda

Specialist lender LoanU rebrands to Gedda

The personal and auto loan provider LoanU, which specialises in helping Australians with impaired credit histories...

READ MORE
tech tools

CBA introduces AI technology to combat scams

New figures released by the competition watchdog this week have revealed that Australians lost more than $2 billion...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
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
Read more