The Reserve Bank has announced it will ease LVRs (loan-to-value ratios), which could be good news for first home buyers.
1NEWS' political editor Corin Dann breaks down the LVR lending release today.
The bank released its six-monthly update on the health of the financial system this morning.
The change means first timers will be able to get a loan without a minimum 20 percent deposit.
LVRs were introduced in 2013 to cool the housing market, and required that most people applying for a home loan to have a 20 per cent deposit.
First home buyers have complained that it has made it difficult to get into the market.
Chief Executive Ashley Church says the private sector is part of the solution – not the problem.
When they were introduced, the Reserve Banks said the LVRs would be a temporary measure.
Under the new rules, "no more than 15 per cent (currently 10 per cent) of each bank's new mortgage lending to owner occupiers can be at LVRs of more than 80 per cent.
"No more than 5 per cent of each bank's new mortgage lending to residential property investors can be at LVRs of more than 65 per cent (currently 60 per cent).
Reserve Bank Governor Grant Spencer said "LVR policies have been in place since 2013 to address financial stability risks arising from rapid house price inflation and increasing household debt".
"These policies have helped improve banking system resilience by substantially reducing the share of high-LVR loans.
"Over the past six months, pressures in the housing market have continued to moderate due to the tightening of LVR restrictions in October 2016, a more general firming of bank lending standards and an increase in mortgage interest rates in early 2017.
"The Bank will monitor the impact of these changes and will only make further LVR adjustments if financial stability risks remain contained."
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