High risk loans with deposits of 10% or less have increased over the September quarter, amounting to $10.8 billion, or 14.1% of the total home loans approved. These low deposit loans have Loan to Value ratios of 90% or more. This is the highest that it has been since the 2009 Global Financial Crisis, according to RateCity.
The surge is mainly attributed to high property demand in key cities, such as Sydney where there is cutthroat competition in acquiring property. Lenders are urged to maintain lending standards to avoid future repercussions in case the interest rates shoot up.
Read more about this on the Sydney Morning Herald website.