Lenders are moving to tighten their loan approval criteria in response to deteriorating economic conditions. Adelaide Bank has decreased the maximum loan-to-value ratio that it will approve to 90 per cent for principal and interest loans and to 80 per cent for interest only loans, while a memo to brokers issued at the end of March says that it would now require borrowers to have at least 5 per cent of the property value saved. AMP Banking has added 20 basis points to the interest rate for any loan above 95 per cent of the property's value to reflect the higher risk level. Newcastle Permanent Building Society has increased the ratio of net disposable income to mortgage repayments an applicant must have from 1.25 to 1.35. Most lenders have withdrawn their loans that allowed borrowers to obtain 100 per cent of the value of a property while many lenders have increased the requirements to qualify for low-doc loans
