Reinstating Loan-to-Value Ratio restrictions

Release date
08/12/2020

A loan-to-value ratio (LVR) is a measure of how much a bank lends against mortgaged property, compared to the value of that property. Temporary limits on high LVR residential mortgage lending have been in place since October 2013. The restrictions have been revised over time and were removed in response to the economic impact of the COVID-19 pandemic. We are currently running a public consultation on a proposal to reinstate LVR restrictions at the same level as prior to the onset of COVID-19. We welcome feedback on this proposal and will be accepting submissions until 22 January 2021.

LVR lending restrictions differ depending on whether a loan is secured by residential investment property or owner-occupied residential property. The previous limits that applied to bank lending to investors and owner-occupiers are shown below.