Home loan ratios wither during downturn

Mozo

Monday 06 April 2009

Australians who are eager to buy their own home may have to continue stashing cash in savings accounts for a few more years as banks shy away from big home loans.

The Sunday Telegraph reports that a bevy of the country’s biggest banks have all announced that they are cutting their maximum loan to value from 95 per cent to 90 per cent.

"What you are seeing is a staged pullback by lenders from the market, to reduce risk," said Stuart Barton, a spokesperson for Challenger, one of the banks cutting loan ratios.

This would mean that first-home buyers looking to buy a $250,000 home would have to save up an extra $12,500 for a deposit, bringing the total to $25,000.

Such policies may make it even more important for first-home buyers to compare savings accounts to make their money work harder.

First-home buyers may also be eager to hear whether the Reserve Bank of Australia will cut interest rates again tomorrow (April 7th).


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