APRA insight on LVRs

Ask a banker what is the average LVR of the bank's mortgage book and he will say it is about 60 per cent.

The latest issue of the Australian Prudential Regulation Authority's Insight publication gives the lie to this shibboleth.

APRA collected data on all the loans approved by 44 financial institutions in the month of September 2006. In all, there were 112,000 loans, with a median value of  $208,000 and an average of $245,000.

The average LVR was not 60 per cent but 72. Twenty per cent of the loans had LVRs of more than 80 per cent and 13 per cent had LVRs over 90 per cent.

Lenders were more cautious when it came to writing low doc loans. The average LVR on low docs was 54 per cent.

Forty per cent of low doc loans were insured, compared to 30 per cent for the whole sample.

Brokers appear to love writing low doc loans. Sixty per cent of the low doc loans in the sample were sourced through third parties compared to 30 per cent third party origination for all other types of mortgages.