A leading financial CEO says banks are considering riskier lending as the Melbourne property market softens and it’s first-home buyers that are most looking to get involved.
Chief executive of Genworth Mortgage Insurance, Georgette Nicholas, believes the tightening of lending for high loan-to-value mortgages has bottomed out.
“What we’re seeing, as we think about new insurance written, is a little uptick in above-the-90 per cent loan-to-valuation band in the second half of 2017,” she told Australian Financial Review.
“We think some of the impact of that is first-home buyers getting back into the market.”
Ms Nicholas said the impact of the Australian Prudential Regulation Authority’s caps and restrictions were leveling.
“Lenders took a pretty strong approach to reducing policy in the high LVR bands when APRA put regulations into effect about two years ago, but we’re starting to see lenders coming into that segment,” she told AFR.
For Genworth, in the 12 months to December, the insurer saw an increase in high LVR mortgages after several years of decreases.
“If you look at Sydney and Melbourne, where you are seeing some price reduction over the second half of the year, you’re starting to see more supply in those markets come on,” Ms Nicholas said.
“So that opens up opportunities for first-home buyers who want to get into the market, get access to it.”