New research has raised more concerns about the size of loans being taken out by Australian home buyers.
Credit ratings agency Moody’s produces ratings for mortgage-backed securities, which are the way an increasing number of home loans are funded.
The agency’s annual study of loan collateral has confirmed a gradual shift in 2006 to bigger loans compared to the value of the property being bought.
It says that for the first time, there has been a significant percentage of loans with loan-to-valuation ratios above 95 per cent.
Moody’s says this is a potential concern, given the strong correlation with delinquency.
It also says the high amount of low-document loans in Western Australia needs to be monitored, especially as prices appear at the top of the cycle.
But New South Wales is the main contributor to delinquent loans, reflecting its sluggish property market.
Source: abc.net.au
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