Hk gets lending right

Hk, what an entrepreneurial place. If you have no income, but have 100% of the purchase price and a few years' interest saved up, banks will lend 40% at around 1.7%. And they will give you a 1.5-2.0% cash rebate.

When will Aus banks realise this is a much safer class of borrowers than the guys who borrow 90% and rely on their job (which they could lose any minute)?

 

With all the tightening, I'm starting to think it's going to have to go back to the old 'front up to the bank manager/broker in a suit' type of scenarios, where it's more touchy feely and hopefully common sense prevails.

 

That is interesting and worthwhile to have these type of low LVR exceptions IMO. The risk is so low from a financial stability perspective when LVRs a minimal (where is the loss?!). It may be worth having carve outs to general risk principles to account for lower LVRs (e.g. override serviceability).

There is some scope to do this in Australia at higher LVRs with commercial lending that falls outside standard residential regulatary rules. May be worth having this applied to us too.

In terms of overall macro prudential type policies, some are far more draconian and interventionary than in Aus. IMO Aus regulators have started out with the right approach targeting fixes to lending and getting the framework right. Far more considered than direct LVR caps or serviceability ratio caps that squeeze out certain types of borrowers.