Tuesday, 7 June 2011

Lenders up LVRs to coax borrowers

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Lenders up LVRs to coax borrowers

By Adam Smith | 7/06/2011 3:15:00 AM

As borrower demand for mortgages flags, lenders are trying to coax consumers into the market with higher LVRs.
According to a study by comparison site RateCity, the number of lenders offering LVRs of 97% or above has doubled since January of this year. Home loans of a maximum 97% LVR now represent 5% of all products in the site's database. The study has also indicated that major banks are increasingly comfortable with high LVRs. In January, ANZ increased LVRs on most of its product suite from 90% to 95%. CBA offers up to 97% LVR on most of its home loans, while NAB offers between 90% and 95%. Westpac products carry a maximum 92% LVR.
RateCity CEO Damian Smith said the move toward higher LVRs indicates lenders are looking to stimulate growth in a lagging mortgage market. He said the proportion of home loans with a maximum of 95% LVR has increased 8% since January, and now represents 62% of all mortgage products in the company's database.
"We haven't seen this level of money offered to mortgage borrowers since the start of 2009. Lenders are trying to kick-start growth in the mortgage market, and more generous LVRs and lending criteria are the key tool they use," Smith said.
Related stories:
Buyers clamour for 100% loans
Lenders raise LVRs as crisis eases

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