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Potential home owners may find it easier to break into the property market in 2012, as a greater number of lenders increase their maximum loan to value ratio.
According to new data by RateCity, nearly 70 per cent of all home loans have an LVR of 95 per cent and above – significantly higher than the 50 per cent recorded two years ago.
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RateCity's chief executive Damian Smith said it's the first time in more than three years that this proportion of home loans offered Australians borrowing power of 95 per cent and higher of the value of a property.
"In early 2008, there were quite a few loans – 21 per cent in fact – that didn't require any deposit at all. The GFC saw lenders really tighten their belts on mortgage criteria by requiring much larger deposits – so almost all of these high LVR home loans disappeared," he said.
"After a couple of years of really tight lending criteria, things are starting to loosen up again. While there are still no home loans in our database with 100 percent LVR, many lenders are taking on more risk than they have in the past three years by offering higher LVRs."
Mr Smith said many lenders have loosened their lending criteria to encourage growth in a slow mortgage market.
"Last year the Australian Bureau of Statistics recorded 536,511 home loans financed in 2011. While that's slight growth (11,000 more borrowers) than 2010, it's still the second lowest total number of home loans financed since the year 2000," he said.
"One of the biggest barriers for potential home buyers is saving for a deposit and the easiest way to encourage more buyers is by offering borrowers bigger loans with smaller deposits."
