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High LVR lending falls to ‘record low’

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.

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“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.”

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.

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’
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