Banks relaxing LVRs and serviceability criteria but valuations still conservative: Sam White

Investors and owner-occupiers may now be able to borrow at loan-to-value (LVRS) ratios as high as 95%, according to Ray White deputy chairman Sam White.

Banks were only willing to lend up to 90% of the value of the property last year, but this has now risen to 95%, says White, who is also the executive chairman of Ray White’s mortgage broking arm Loan Market.

However, the catch is that property valuers continue to be conservative, meaning a 95% loan could actually be under 90% of the agreed purchase price if the bank receives a lower valuation.

Banks lend based on the independent valuation they receive of the property – not the agreed purchase price – meaning borrowers must make up the shortfall themselves.

Overall, though White says Loan Market brokers are seeing “more aggressive lending”, with lenders also reviewing their serviceability criteria.

A similar phenomenon was noted by mortgage broker Smartline, which said banks were now willing to look at secondary incomes when considering loan applications

White says some lenders will consider rental payments as well as irregular income, such as bonus payments and commissions.

“We can place clients with a strong rental history,” White told The Australian Financial Review.

Furthermore he says fixed interest rates remain attractive, while variable mortgage rates are set to fall with more RBA rate cuts expected.

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