The Reserve Bank has finalised tougher-than-expected restrictions on low-equity home loans that will come into force from October 1. In a speech today, governor Graeme Wheeler announced that banks would have to restrict new lending with loan-to-value ratios (LVRs) of more than 80 per cent to no more than 10 per cent of the dollar value of their new housing lending flows. That will dramatically reduce the amount of high LVR loans the banks are writing, making it much harder to get a mortgage with a deposit of less than 20 per cent. In theory, the new regime could strip about $2 billion out of the loan market in a year, equal to more than 4000 homes at average prices. The announcement is harsher than the 12 per cent 'speed limit'
Posted on: Tue, 20 Aug 2013 05:17:34 +0000