Warn­ing over high home loans

Port Douglas & Mossman Gazette - - FRONT PAGE -

BOR­ROW­ERS are be­ing of­fered big­ger home loans com­pared to their de­posits than at any time since the global fi­nan­cial cri­sis hit, new re­search shows. This has sparked fresh con­cerns that some home­own­ers will not be able to meet their mort­gage re­pay­ments when Aus­tralia’s record low in­ter­est rates start to rise in the com­ing years.

But the bank­ing sec­tor is adamant that its lend­ing stan­dards are not be­ing eased to boost mar­ket share.

How­ever, a re­port from fi­nan­cial com­par­i­son web­site Rate City warns that al­most three­quar­ters of loans on its data­base last month of­fered bor­row­ers a ‘‘loan to value ra­tio’’ of 95 per cent.

This means bor­row­ers need to pro­vide just five per cent of the pur­chase price.

The Au­gust fig­ures show 73 per cent of the avail­able loans have an LVR of 95 per cent - up from 68 per cent last year and the high­est low of 49 per cent in 2010.

‘‘Lenders are loos­en­ing the belt on home loan cri­te­ria mean­ing many more po­ten­tial bor- row­ers are el­i­gi­ble for loans that may not have been ap­proved in the past," RateCity chief ex­ec­u­tive Alex Par­sons said.

‘‘All ma­jor banks now of­fer home loans with up to 95 per cent LVR, while West­pac also of­fers up to 97 per cent LVR on some of its home loans.’’

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