From the AFR this afternoon:
Allan Savins, chief operating officer at non-bank lender RESIMAC, told the Australian Securitisation Forum conference in Sydney on Tuesday that higher loan-to-valuation ratio (LVR) products were “creeping in” to the market.
Stephen Campbell, head of credit risk management at QBE’s lenders mortgage insurance business, said maximum LVRs had reverted back up to 95 per cent (5 per cent deposit), the proportion they were at before the financial crisis struck in 2008. Adding in the cost of lenders mortgage insurance, the maximum LVR was about 98 per cent.
…The move has prompted local market speculation that Australian regulators may have to introduce similar measure to cool surging house prices which are rising due to low interest rates.
As they should, but:
Mr Campbell, however, dismissed the need for a formal rule in Australia, saying APRA was already liaising with banks about their LVRs.
And if it was working why are we having this discussion? Back:
The trend is happening across big banks, smaller banks and non-bank lenders Digital Finance Analytics principal Martin North said.
“The smaller organisations really can’t compete on price because they have more expensive funding, so because there is demand for higher loan to valuation ratios some of the smaller guys feel this is something they can pursue,” Mr North said.
ME Bank recently increased its maximum LVR to 97 per cent.
Macroprudential now.
