Data from APRA shows that over the September 2014 quarter, 33.0 per cent of new mortgages from Australian ADIs had a Loan to Value ratio ( LVR) of 80 per cent or more.
Breaking the data down further:
- 25.2 per cent of new mortgages had an LVR of less than 60 per cent
- 41.8 per cent had an LVR of between 60 per cent and 80 per
- 20.9 per cent had an LVR of between 80 and 90 percent and
- 12.1 per cent had an LVR of more than 90 per cent.
Interestingly, compared to data from the same time a year earlier, loans with an LVR of more than 90 per cent was the only segment to experience a decline, down 3.8 per cent. On the other hand, loans with an LVR of between 60 per cent and 80 per cent have recorded the greatest annual increase, up 16.8 per cent.
It is important to remember that in Australia virtually all mortgages taken out with an LVR of more than 80 per cent are mortgage insured.
Mortgage insurance is paid by the borrower and protects the lender against loss on that mortgage.
Of course, there remains a high proportion of borrowing above an 80 per cent LVR however, mortgage insurance does act as an incentive for many to save a greater deposit before purchasing to avoid this additional cost.
Source Corelogic Property Capital Markets Report 2015