Warning over high home loans
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.’’