First-home buyers are finding it easier to get a home loan as a slowing housing market prompts retail banks to drum up new business.
Latest figures show lending to those with a low deposit is at its highest level since the Reserve Bank introduced restrictions in October last year.
The central bank's loan-to-value ratio restrictions limited low deposit lending to no more than 10 percent of new mortgages. It had a dramatic effect, awith retail banks sharply curtailing low deposit lending at one stage to less than 4 percent of new lending.
Official figures show this recovered to 6.7 percent in June this year, with or $297 million of new lending going to those with a less than 20 percent deposit, the best showing in eight months.
The Bankers' Association said that was due in part to banks having better control over their loan books.
Industry players say higher interest rates, the traditional winter slowdown and the forthcoming general election have dampened buyer interest, and prompted banks to try to attract first-home buyers.
Bruce Patten, a director of mortgage broker Loan Market, said even potential buyers with less than a 10 percent deposit can get a foot on the property ladder and expects banks to loosen their grip further.
The earliest the Reserve will consider lifting limits on low deposit loans is later this year, though most analysts say it's likely the restrictions will be eased gradually, rather than removed all at once.