Home lenders are offering lower rates on loans with low loan-to-valuation ratios, as part of move to reduce risk in their mortgage portfolios.
Comparison site RateCity reports that Reduce Home Loans is offering a variable mortgage rate of 2.25 per cent on loans with LVRs up to 60 per cent.
Homestar Finance and Freedom Lend also have special low rates for loans with LVRs up to 60 per cent – both offering 2.29 per cent.
Among the big banks, Westpac cut its basic variable rate from 2.93 per cent to 2.69 per cent for loans with LVRs up to 70 per cent. The rate for loans with LVRs above 70 per cent was cut from 3.03 per cent to 2.79 per cent.
Westpac subsidiaries St George, Bank of Melbourne and BankSA made similar changes.
“LVR pricing” is nothing new but RateCity reports it is becoming more prevalent. Competition in the home loan market remains strong but lenders also want to reduce their risk exposure.