Why wont banks lend more than 80% LVR in CBD areas?

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nateoh
Member
@nateoh
Join Date: 2009
Post Count: 1
February 10, 2009 - 10:57 pm
Hi all,
I've found a nice apartment in Melbourne CBD, all ready to go and then boom! I need 20% of the value. They tell me that its because of the days on market factor, which I don't personally see; especially in comparison to other suburbs in Melbourne and especially because a previous apartment in the same block went in 14 days!
I also hear a lot that its because the banks consider the cbd riskier, which I also can't understand; the residential demographic there is on average better capitalised than the suburbs and rental yields are much higher. This should mean less chance of default right? Or could it be the fear that the investor contingent will liquidate their assets in tough times? Could it be that inner-city apartments are over-supplied? If somebody could explain this to me that would be great. Also, does anybody know of any lenders that go higher than 80% in the CBD?
Regards,
Nate
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
February 11, 2009 - 3:37 am
Nate
Many lenders subject to LMI approval will go above 80% LVR.
It all boils down to the security being offered and you the applicant.
Richard Taylor | Australia's leading private lender
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
February 11, 2009 - 12:29 pm
I think there are a number of reasons they don't like inner city and they mostly come down to risk:
– most are high rises, more loans in the one building is risky.
– oversupply – always new units popping up
– harder to sell (because its harder to get finance!)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au