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One of Australia’s leading brokerages has urged the government not to reduce maximum LVRs.
Home Loan Experts' managing director Otto Dargan said in his firm’s submission to the Senate Inquiry into Housing Affordability that APRA’s policies on LVRs are “too restrictive”
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“Currently, APRA has placed significant policy constraints on the banks,” he said.
“If they are required to reduce maximum LVRs similar to New Zealand, this will make it harder for first home buyers to enter the market since most tend to borrow around 90 per cent of the property value.
“Limiting the LVR to 80 per cent would require buyers to save up double the amount of deposit to make a purchase.”
Mr Dargan also warned the government that its treatment of property developers was causing a supply shortage that was making it harder for people to afford housing.
“With the population expected to double by 2075, or even as early as 2058, this problem is only going to get worse as the demand for new housing increases,” he said.
“Earlier in November, Shane Oliver, chief economist with AMP Capital, [said] the government should work to release more land to build on and they should make it easier for developers to build new properties.
“We agree that removing these barriers would help with the problem of affordable housing.”
Mr Dargan also advised the government not to abolish negative gearing and praised the effectiveness of the first home owner’s grant.
Home Loan Experts was ranked 25th in The Adviser’s Top 25 Brokerages list in 2013.
