High LVR mortgages boom

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From the SMH:

Financial comparison website RateCity says about three-quarters of home loans being offered in Australia now require a mere 5 per cent deposit or less, terms not seen since the aftermath of the 2008-2009 global financial crisis.

‘‘Many more potential borrowers are eligible for loans that may not have been approved in the past,’’ RateCity chief executive Alex Parsons said today.

He says 73 per cent of local lenders have increased the loan to value ratio (LVR) on mortgages to 95 per cent or higher, requiring a 5 per cent deposit or less.

The LVR is the maximum mortgage offered as a percentage of a property’s value.

Only 68 per cent of loans offered last year had such a high LVR. It dropped as low as 49 per cent in 2010 after the GFC.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.