Record Low-Deposit Lending Emerges as Lender Competition Heats Up — What High-LVR Borrowers Should Know

Low-deposit home lending has climbed to record levels as competition between lenders intensifies, according to new market data. As growth slows and lenders compete harder for a smaller pool of active borrowers, more products are emerging for buyers who can't put down a large deposit — a shift with real implications for high-LVR borrowers.

Why competition is rising

With first home buyer and investor volumes both falling since the budget, and auction clearance rates below 50%, lenders are working harder to win the borrowers who remain. That competitive pressure is showing up as sharper pricing and, notably, more willingness to lend at higher loan-to-value ratios (LVRs).

What high-LVR borrowers should watch

More low-deposit options are welcome, but a bigger loan against a smaller deposit carries specific considerations:

• Lenders Mortgage Insurance (LMI): Above 80% LVR, most lenders require LMI, which can add thousands to the cost. Compare whether a lender waives, caps or capitalises it.
• Serviceability, not just deposit: A small deposit means a larger loan — and a tougher serviceability test. For self-employed borrowers, how a lender assesses income is often the deciding factor, not the deposit size.
• Buffer and rate sensitivity: With the RBA at 4.35% and the outlook two-sided, a high-LVR loan leaves less room to absorb a rate rise. Structure and buffer matter.

The MPFG perspective

Competition expanding the low-deposit market is good news — but the borrowers who benefit most are those a bank still can't easily assess. MPFG serves self-employed clients, new migrants and expats whose income or residency profile doesn't fit a standard high-LVR bank model. Our Expat pathway, for example, lends up to 80% LVR for Australians overseas, while Alt Doc options let self-employed borrowers qualify on BAS or accountant-verified income. More competition helps most when it reaches the borrowers the mainstream still overlooks.

This article is general information only and does not constitute financial or credit advice. LVR limits, LMI and eligibility vary by product and applicant.