Mortgage lenders are approving home loans without inspecting properties, forking out to applicants without a deposit and encouraging clients to shoulder debts far beyond their means.
More than half of all standard mortgage applications are now done without an onsite inspection and lending competition is encouraging banks and other institutions to extend loans quickly and cheaply, Fairfax reports today.
Banks are also urging people to take on debts which swallow up to half their income.
One-quarter of loans to people with bad or incomplete credit histories had been approved without on-site inspections, relying instead on a drive-by or statistical analysis of local sales data.
The average loan-to-value ratio of new loans in NSW has risen from 51 per cent in 2003 to 75 per cent this year.
Australian Property Institute president Gregory Preston said borrowers were at risk.
"If they get caught out and are forced to sell the borrower is sort of out on a limb," Mr Preston said.
Source: AAP
