As competition for homes heats up, survey data from consultancy Digital Finance Analytics shows the average LVR for new home loans issued to first-home buyers has been steadily rising, to 80.8 per cent in the September quarter compared with 74.8 per cent a year earlier. While banks maintain they are not cutting lending standards, the consultancy’s founder, Martin North, said the trend suggested big banks were easing their underwriting criteria slightly, and becoming more aggressive in trying to win customers.
”My read is that the banks are being a little bit more aggressive. They want to grab a larger share but they are relatively conservative overall,” Mr North said.
Some first-home buyers were borrowing ”well above” 90 per cent of the property’s value in response to fierce competition, he said. The same trend last week prompted ME Bank to raise its maximum LVR to 97 per cent, including the cost of mortgage insurance.
As well as first-home buyers, investors are also funding a greater share of their purchases with borrowed money.
The average LVR for new loans to investors rose to 77.9 per cent in September, compared with 76.5 per cent a year earlier and 73.2 per cent at the same time in 2011, Mr North’s figures show. Bankers say a likely reason for the rise is the growing popularity of interest-only loans, which do not require the borrower to pay back the loan’s principal.
Aussie Home Loans is planning to recruit hundreds of mortgage brokers and open dozens of new branches as part of an expansion drive as it looks to capitalise on booming conditions in the housing market.
…“It was our biggest month and we are heading into some more terrific months, so we are firing on all cylinders,” he said. “There is more confidence out there. The market is picking up – in some areas more than others – and people are taking the opportunity while interest rates are low.”
…“I am certainly not of the opinion that we are anywhere near a bubble,” he said. “But if all of a sudden it gallops ahead at an unsustainable rate, I’ll be the first to say things have got to cool down, but certainly we are not seeing that in the market.”
And just a remainder of Sydney price rises:
I look forward to seeing the rate turn “unsustainable”.
