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Specialist commercial lender Private Mortgages Australia (PMA) has raised its maximum loan to valuation ratio (LVR) to 80%.
PMA’s prior maximum LVR for metro residential security property was 75%. This added five percentage points comes after the firm partnered with property market analyst Property Predictions which measures demand trends and expected changes across the national real estate market.
Access to Property Predictions’ Traffic Light Reports provides greater confidence when lending to borrowers who secure finance against property in particular suburbs, said PMA managing director Tony Barbone.
“Most private lenders will generally only lend 65% to 70% LVR, and a lot of the time this is based on a forced-sale valuation rather than the true value of the security property. We always take the true value of the security property without any tricks in order to give our borrowers a better solution.”
Barbone told Australian Broker that the reports themselves give insight into market conditions and directions for select suburbs.
“If the suburb’s median price is forecast to increase then we can confidently lend into a rising market on a higher LVR.”
The figure of 80% was chosen to break the stereotype that all private lenders were “hard-nosed,” he added.
“We consider 80% LVR on metro residential security without LMI as a widely accepted LVR so why should private lenders be any different?”
These reports are compiled using predictive, patented algorithms developed by property market analyst John Lindeman. This system allows PMA to deliver better solutions to their clients, Lindeman said.
“The predictive software we use gives [PMA] the confidence to back the borrower and increase the maximum LVR to 80% in selected suburbs. It creates a win-win situation for both PMA and the borrower.”
The new LVR is applicable to new applications as well as loan opportunities already being processed by PMA's credit team.
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