The vast majority of home loans on offer now require a maximum deposit of 5 per cent.
Just as New Zealand banks are being forced to tighten their lending criteria, Australian institutions appear to be loosening their belts.
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.
BORROWERS are being offered bigger home loans compared to their deposits than at any time since the global financial crisis hit, new research shows.
This has sparked fresh concerns that some homeowners will not be able to meet their mortgage repayments when Australia's record low interest rates start to rise in the coming years.
The International Monetary Fund is also reportedly preparing to look at the risks posed by the recent surge in property prices as part of its annual health check of the Australian economy.
Ahead of the IMF's annual Article IV consultation in November, some offshore hedge funds are betting that Australian bank shares are overpriced and will fall sharply in the coming months, as a result of their overexposure to the housing market.
Property prices were highlighted in last year's IMF report as a pressure point for the Australian economy.
"Despite a recovery in the household savings rate and a recent softening of house prices, high household debt coupled with elevated house prices remains a vulnerability," the IMF said.
And the Reserve Bank's decision to lower official interest rates to a 53-year low of 2.5 per cent in August in a bid to boost growth has seen regulators again warn banks to maintain strict lending criteria.
The banking sector is adamant that its lending standards are not being eased to boost market share.
But the report from financial comparison website Rate City warns that almost three-quarters of loans on its database last month offered borrowers a "loan to value ratio" of 95 per cent.
This means borrowers need to provide just five per cent of the purchase price.
The August figures show 73 per cent of the available loans have an LVR of 95 per cent - up from 68 per cent last year and the highest low of 49 per cent in 2010.
"Lenders are loosening the belt on home loan criteria meaning many more potential borrowers are eligible for loans that may not have been approved in the past," RateCity chief executive Alex Parsons said.
"All major banks now offer home loans with up to 95 per cent LVR, while Westpac also offers up to 97 per cent LVR on some of its home loans."
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