end of 95% LVR loans?

[tigerGT]

Hi,

Spoke to my broker yesterday and he advised that the 95% loans are hard to get and that in the next few months there will be no such thing as 95%/97% loans. He said that 90% loans you will be lucky to get regardless of borrowing power. Are other brokers out there finding the same thing? Is this a pattern that is emerging and if so surely this will be a negative force on house prices?

Thanks Brokers and investors and all who contribute!

 

[Rolf Latham]

Hiya

Hmmmmmmmmmm

Id say there is some thruth in that, however its very very much an over generalisation.

95s are still around without too much stress, though loan amounts have been reduced and there have been some tougher rules applied

90s should be ok for a long while yet............at least anpther 90 days which is a long time in this biz

ta
rolf

 

[tigerGT]

thank you Rolf. So what happens when the 90s are gone? are you suggesting that they could be gone soon?

 

[sash]

Personally, I can't see the 95% loans disappearing.

But if they are offered you will need to provide that you can service the loan and the underlying asset quality has to be solid.

All my loans in the last 3 years have been 95% loans. I did one as recently as February at 95% on a 226k loan. Amounts above 500k have a greater level of scrutiny...whilst stuff under 300k in the major cities are quite easy so long as they meet valuation or not studios.

 

[Qlds007]

Maximum lvr in the UK is now at 85% and you to be pretty strong to get qualify.

 

[Trogdor]

I hope we go back towards 80% - then surely yields will go up to a decent level esp at the bottom / middle end.

 

[Peter_Tersteeg]

I'm not saying it couldn't happen, but I suspect there would be a lot of government preasure to keep 95% loans alive, at least for first home buyers. Helping people buy their first home is good for votes.

I can see them disappearing for investors.

This would be driven by the insurers. Dropping 95% LVRs would open the market for other insurers so if they did die, I could also see them coming back.

 

[Spectre]

Which could be a reason why CBA is now doing a self-insurance it would seem...

From the bulletin issued today

Low Deposit Premium (LDP)
Recent legislative changes allow the Bank to hold the capital aside and cover its own lending rather than take out Lender’s Mortgage Insurance (LMI).

Benefits include:
o LDP is automatically charged on selected new, top up and refinance loans
o LDP uses the same premium rate as LMI however no Arrangement Fee or Stamp Duty
will apply
o LDP saves time by removing the need to wait for approval from Mortgage Insurers.

Aside from the higher revenue that CBA'll be making from the premiums too. Gooood stuff?

 

[Buzz]

My Bankwest BDM said 95% loans are still OK - for now. Watch this space.

Jane

 

[slingshot]

Are we talking full docs?

Slingshot

 

[Qlds007]

Slingshot certainly are as lodoc 95 went mid 2008.

 

[caporale]

ING have come out today with the following changes to LVR's on purchases, top-ups and external refi's....


Purchases 90% (plus capitalised premium)
Increases / Top-Ups 90% (plus capitalised premium)
Refinances from other financial institution 85% (plus capitalised premium)

 

[Witzl]

Westpac and CBA are still doing 97%....
NAB is 95% tho.

I dont see it disappearing?

This is for purchasing PPOR just under $500K.

 

[Rolf Latham]

Yeah................But

There are an increasing number of rules regs and moon alignments including max lends per postcode, gen savings, and IO vs PI issues.

As an eg, no IO with WBC above 90 % with nil gen savings etc

ta
rolf

 

[Witzl]

so what consitutes genuine savings with WBC?

 

[Rolf Latham]

Deposit verifications
Applicants must contribute a minimum of 5% from genuine savings for owner occupied housing loans or 10% from genuine savings for investment property loans.

Genuine savings is to be verified by copies of a minimum of three months of bank statements. Where genuine savings is equity accumulation in real estate, this will be verified by a valuation.

Genuine savings cannot be a windfall or gift.



Can be shares, cash at bank etc.

Equity drawn from a LOC or refi is also acceptable

 

[BayView]

I think while there is LMI available on the higher LVR loans, the Banks will keep on offering them.

Having said that; don't be surprised if the LVR required toi avoid LMI drops down in the short term.

 

[StuartW]

Westpac and CBA are still doing 97%....
NAB is 95% tho.

I dont see it disappearing?

This is for purchasing PPOR just under $500K.

Just a matter of days/months in my opinion and 90% will be max across the board.

 

[Token Funder]

I think while there is LMI available on the higher LVR loans, the Banks will keep on offering them.

Having said that; don't be surprised if the LVR required toi avoid LMI drops down in the short term.

1. As we've seen, several banks have already restricted their lending policy to below that which is available through mortgage insurers.
   
2. The cut-off after which MI is required by the lender is driven primarily by the risk weighting (i.e. amount of capital that needs to be held against a given loan) set by APRA for particular LVRs.
   
3. That said, I fully expect further contraction in lending criteria both by the MIs and the lenders. One of the majors was seriously looking to cap resi LVRs at 80%.

 

[chilliaa]

1. As we've seen, several bank's have already restricted their lending policy to below that which is available through mortgage insurers.
   
2. The cut-off after which MI is required by the lender is driven primarily by the risk weighting (i.e. amount of capital that needs to be held against a given loan) set by APRA for particular LVRs.
   
3. That said, I fully expect further contraction in lending criteria both by the MIs and the lenders. One of the majors was seriously looking to cap resi LVRs at 80%.

QBE recently acquired one of the major MI companies. QBE has a VERY good reputation for acquiring assets and then pricing on risk rather than market share or volume. I expect further consolidation downwards. Even at 95% there is not enough surplus to adequately hedge for risk. Remember when mortgage insurance first came out: it was applied against 80%, get ready for some happy medium inbetween.