Australian Prudential Regulation Authority (APRA) data shows the number of residential mortgages with debt to income ratios above six has increased by a whopping 42% to $17.5 billion in the June 2020 quarter.

A debt to income ratio (DTI) is one way the banks measure the ability of a borrower to comfortably repay their mortgage.

While there's no cap on DTI ratios, a DTI six times higher than a borrower's income is considered 'high risk' by many lenders.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
 Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Additionally, the data revealed that the value of 95% loan-to-value-ratio (LVR) loans has soared by 60% from June 2019 to June 2020 to the value of $1.8 billion.

The higher LVR lending could be buoyed by the Federal Government's First Home Loan Deposit Scheme, which allows first home buyers to enter the property market with a deposit as low as 5%. 

According to the scheme's administrator the National Housing Finance and Investment Corporation (NHFIC), roughly 12.5% of all homes purchased by first home buyers during the peak of the COVID-19 crisis were done so using the scheme. 

The report by the NHFIC found that the scheme has allowed first home buyers to shave an average of four years off the time it normally takes to save for a house deposit. 

Meanwhile, interest-only home loans jumped 13.1% in the June 2020 quarter to the value of $20.0 billion, while the number of owner-occupied loans increased by 31.1% and investor loans were up by 24.1%.

"Despite ongoing challenges to profitability, bank financial positions remain sound due to strong capital and liquidity levels, support through various policy measures and signs of reduced risk appetite in residential mortgage lending," the APRA report said.

"There is some degradation of asset quality as a result of COVID-19, although the full scale of this impact will only be seen in the coming quarters."



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