Powered by MOMENTUM MEDIA
subscribe to our newsletter

High LVR lending falls to ‘record low’

The decline in the banks’ risk appetite has been highlighted by the latest statistics from APRA, with low-deposit, low-doc and interest-only lending falling sharply.  

The Australian Prudential Regulation Authority’s (APRA) Quarterly ADI Property Exposures statistics have revealed that the number of mortgages issued with a loan-to-value ratio (LVR) over 90 per cent dropped by 13.7 per cent in the year ending September 2018, from $6.6 billion to $5.7 billion.

Reflecting on the "record-low" drop in low-deposit lending, RateCity.com.au research director Sally Tindall observed: “Banks are increasingly demanding a 20 per cent deposit from people applying for new loans.

“While house prices are dropping nationally, this is a big stumbling block for anyone who miscalculated how much they need for a deposit.

“Just 6 per cent of new loans written this quarter had a deposit of 10 per cent or less.”

Advertisement
Advertisement

The APRA data also revealed that banks’ appetite for low-doc lending also slumped, falling by 43 per cent year-on-year, from $341 million in new loans issued in the 12 months to September 2017 to $196 million.

The number of “other non-standard loans” approved also declined, falling from $115 million to $98 million over the same period.

Further, the effect of APRA’S macro-prudential cap on interest-only lending is also evidenced by the latest statistics, with the number of new loans issued with interest-only terms declining by 13.3 per cent, from $16.6 billion to $14.4 billion.

Additionally, the number of new loans issued through the third-party channel also dropped, slipping from $48.9 billion in the year to September 2017 to $44.6 billion.

The total value of new owner-occupied loans issued over the year fell by $3 billion, from $65.3 billion to $62.3 billion, while investor lending fell from $30.6 billion to $26.8 billion.

PROMOTED CONTENT


On the whole, the total value of new home loans issued by banks in the ending September 2018 declined by $7.1 billion, from $96.3 billion to $89.2 billion.  

[Related: Bump in loan approvals a ‘blip’ amid downturn]

High LVR lending falls to ‘record low’
mortgagebusiness

If you have ever considered how you could better service your SME clients but lack the knowledge or confidence to do this beyond referring them on, this is a must-attend event for you. Don't miss SME Broker Bootcamp, a jam-packed, free-to-attend, practical workshop. Register today and secure your place at this interactive, flexible, must-attend event.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The percentage of young adults looking to pay down their home loans has risen over the past five months, according to new data. ...

Despite the Reserve Bank digging its heels in on the timing of its cash rate climb, Westpac economists have predicted the right conditions w...

Customer-owned banks operate around four branches per $1 billion in assets, while the big four collectively run less than one shopfront per ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

When do you expect the cash rate to start increasing?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.