Aussie homebuyers forking out bigger deposits
Loan-to-value ratios falling in spite of high house prices.
CoreLogic analysis of Australian Prudential Regulation Authority (APRA) figures show loan-to-value ratios are falling across the country, suggesting new buyers are using larger deposits to buy their homes.
“Over the quarter, $6.896 billion in new mortgages written had an LVR of greater than 90%. This represents the lowest value of new mortgage lending for LVRs above 90% since March 2011. It also indicates that 90%-plus LVR mortgages accounted for just 7.7% of all new mortgages over the quarter which was an historic low proportion,” CoreLogic researcher Cameron Kusher said.
Kusher said mortgages with an LVR greater than 80% accounted for 22% of lending, also an historic low.
“This indicates that borrowers are using either larger deposits upon entry to the market or using greater equity in their existing properties,” he said.
Kusher called the trend of lower LVRs “encouraging from a risk perspective”. He said the proportion of interest-only loans also fell, though he argued there was more work to be done to see this segment fall below the 30% cap imposed by APRA.
“With interest-only lending favoured by investors it may lead to a slowing in demand from this segment. Keep in mind that borrowers utilising interest-only mortgages are assessed on their ability to repay a principal and interest loan. Given this, there is the possibility that the impact on investor demand may be minimal as they choose to just use a principal and interest loan rather than interest-only,” he said.