Australian Prudential Regulation Authority (APRA) data shows the number of residential mortgages with debt to income ratios above six has increased by a whopping 42% to $17.5 billion in the June 2020 quarter.

A debt to income ratio (DTI) is one way the banks measure the ability of a borrower to comfortably repay their mortgage.

While there's no cap on DTI ratios, a DTI six times higher than a borrower's income is considered 'high risk' by many lenders.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
 Featured Online ExclusiveUp To $4K Cashback
  • Immediate cashback upon settlement
  • $2,000 for loans up to $700,000
  • $4,000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
 Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
 Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Additionally, the data revealed that the value of 95% loan-to-value-ratio (LVR) loans has soared by 60% from June 2019 to June 2020 to the value of $1.8 billion.

The higher LVR lending could be buoyed by the Federal Government's First Home Loan Deposit Scheme, which allows first home buyers to enter the property market with a deposit as low as 5%. 

According to the scheme's administrator the National Housing Finance and Investment Corporation (NHFIC), roughly 12.5% of all homes purchased by first home buyers during the peak of the COVID-19 crisis were done so using the scheme. 

The report by the NHFIC found that the scheme has allowed first home buyers to shave an average of four years off the time it normally takes to save for a house deposit. 

Meanwhile, interest-only home loans jumped 13.1% in the June 2020 quarter to the value of $20.0 billion, while the number of owner-occupied loans increased by 31.1% and investor loans were up by 24.1%.

"Despite ongoing challenges to profitability, bank financial positions remain sound due to strong capital and liquidity levels, support through various policy measures and signs of reduced risk appetite in residential mortgage lending," the APRA report said.

"There is some degradation of asset quality as a result of COVID-19, although the full scale of this impact will only be seen in the coming quarters."



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