In this week’s 2 minute property investment news video- more people are now eligible for loans due to the increase in loan to value ratios.
Banks are increasing their loan to value ratios. It seems lenders are more willing to lend to people with less deposit or equity than since the onset of the global financial crisis.
By increasing the loan to value ratio, more people are now eligible for loans, according to RateCity. August figures show 73 per cent of home loans in the RateCity database have an LVR of 95 per cent or higher.
In fact, it’s now possible to borrow up to 100 per cent of the value of a property. However, some regulators are concerned about it and are calling on banks to maintain sensible standards.
There are suggestions banks could start tightening their belts in the coming months, as has been the case in New Zealand.
Speaking of loans, it could be a signal that consumers believe interest rates are about to rise because the level of fixed home loans is increasing. More than 18 per cent of all loans financed in July were fixed, according to finder.com.au.
The proportion of fixed home loans is also at the highest level for the past five years and in many cases the fixed rate is lower than the variable rate on offer.
But fixed rates are still falling, with the lowest two-year fixed rate now at 4.49 per cent. Maybe it is a good time to lock your rate in – if not all of your borrowing then at least some.
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