In total banks held $95 billion in mortgage lending in the March 2020 quarter - up 20.1% on the same quarter in 2019, but down 10.9% on the December quarter, according to the Australian Prudential Regulation Authority's (APRA) quarterly statistics released on Authorised Deposit-taking Institutions (ADIs).

APRA's report said, "This likely reflects the seasonality of the housing market and potential early changes in borrower sentiment with the onset of COVID-19".

High loan-to-value ratio (LVR) loans of 95% also saw the highest growth in percentage terms out of any ratios, up from 1.5% of total loan books to 1.9% in a year.

In March 2019 total 95% LVR ratio values amounted to $1.174 billion of the total loan book of just over $78 billion, while in March 2020 that value was $1.791 billion in a total loan book worth about $94.5 billion.

However, high-LVR loans make up a small segment of the market and could decrease as banks look for 'safer' borrowers.

"Given the current heightened risk environment, a shift in new lending away from higher LVRs is possible," the APRA report said.

This is evident anecdotally as many lenders are cutting rates for borrowers with 70% LVRs or less, however the higher LVR lending could be buoyed by the Government's First Home Loan Deposit Scheme, which was launched in January.

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.

Lender

VariableMore details
4.6 Star Customer RatingsIncludes Nov RBA Rate Increase
4.6 Star Customer RatingsIncludes Nov RBA Rate Increase

loans.com.au – Variable Home Loan (LVR < 90%)

    VariableMore details
    Unlimited Redraws
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    ubank – Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

    • No annual fees – None!
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    • Unlimited additional repayments free of charge
    • Redraw freely – Access your additional payments when you need them
    • Home loan specialists available today
    VariableMore details

    ANZ – Standard Variable Home Loan (Principal and Interest) (LVR < 80%)

      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 December 8, 2023. View disclaimer.

      Meanwhile, the interest-only portion of the loan book slid to 17.4% in March 2020, but newly-funded interest-only loans increased for the first time since June 2019, comprising 18% of the newly-funded loan book.

      "Further shifts to interest-only lending are likely, with borrowers seeking flexibility in their loan conditions to meet repayments during COVID-19," APRA's report said.

      Australians are also taking on more debt in proportion to their income compared to a year ago.

      Just over $15 billion worth of loans were held by the banks for both owner-occupiers and investors with a debt-to-income ratio of 6x or more in the March 2020 quarter - 17.6% of the loan residential loan book.

      In March 2019, that figure was just over $11 billion, or 16.5% of the residential loan book.

      It should be noted that this generally coincides with property prices rebounding markedly after finding a floor in May 2019.

      For reference, Australia has the second highest personal debt-to-GDP ratio in the world at 120.14%, behind Switzerland at 128.7%, according to the International Monetary Fund.

      The Australian Bureau of Statistics also estimates more than half of our debt is tied up in owner-occupier mortgage lending.





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