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While more lenders continue to reintroduce 95 per cent LVR mortgages, the industry remains at odds over whether or not there is appetite for lending at 100 per cent. This month, we asked...
DO YOU EXPECT TO SEE THE RETURN OF NO DEPOSIT HOME LOANS?
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MURRAY COWAN
Better Mortgage Management
High LVR loans are making a comeback following a scale back during the GFC, and they will continue to be offered in the marketplace provided residential property values and the general economic outlook remain strong. That said, I think it is unlikely we will see a return of 100 per cent loans in the medium term. High LVR loans are riskier as it is easier for borrowers to walk away if they have little of their own money at stake.
PETER KEARNS
Think Tank Group
As a commercial lender we do not see these high LVRs. However, as an outsider looking into the residential market, with the new NCCP guidelines and the additional rigor required around proving clients' servicing capacity - plus the onus around the brokers and lenders to not place borrowers into loans they cannot afford - I doubt we will see a push back into 100 per cent LVR loans in the near future.
PAUL CAPUTO
Genworth
One thing we learnt from the GFC was that borrowers perform better when they have some level of savings. Their behavior is very different to those that have no savings at all. In this respect, I don't think we are going to see the industry move back to 100 per cent LVRs in the near future. Remembering you have the NCCP, and the question becomes: with 100 per cent LVRs, how does they fit in with the responsible lending guidelines?
MARK FORSYTH
Firstfolio
Eventually one lender will make the move back to 100 per cent LVRs, if only to beat out its competitors. The reality of 100 per cent LVR and high LVR products is that they are very hard to obtain. The lenders place very strict guidelines around these products because they are deemed ‘risky'.
Finance Made Easy
If the market continues to gain confidence I think we can expect to see 100 per cent LVRs return. In recent weeks we have seen a lot of the majors start to relax their policy and increase their lending back into the 95 per cent LVR space. As the market continues to improve the next logical step would be for lenders to move back into 100 per cent LVRs. It may be a second tier lender that decides to move first in a bid to highlight its point of differentiation.
