KEY POINTS:
The days of taking on the financial burden of a 110 per cent mortgage may be over.
Last year, people were borrowing more than a property was worth so they had cash to do alterations, cover initial debt servicing or buy luxury items.
Now, banks have tightened their approach.
Customers are also realising the risk of borrowing more than a property's value, and the banks say fewer people are now seeking 110 per cent mortgages.
Westpac's media relations manager, Craig Dowling, said even getting up to 90 per cent of a property's value could be a stretch these days.
"Since the start of the year and a tightening or our own criteria coupled with a general lack of appetite among our customers, such mortgages of over 90 per cent are rare."
But he said high mortgages were only a tiny portion of the bank's business, although he did not rule out continuing to lend at the upper end of the scale.
"We have not put a blanket halt on such lending, as there will always be circumstances where it is viable for us, and desirable for our customers. Such a situation might be where a customer has a high income stream, and significant assets but those assets may be tied up elsewhere for a time."
Westpac had been careful in how it had loaned on property, he said, and the higher-risk mortgages were only a small portion of the bank's overall mortgage book.
"To put it in context, our general disclosure statement for the half year to March 31 notes that 95 per cent of our mortgage book worth over $33 billion had a loan-to-value ratio better than 90 per cent."
BNZ external relations manager Diane Maxwell also emphasised low-risk mortgages.
"Historically the BNZ has been pretty conservative in the 80 to 100 per cent space," she said. "Loans with high loan-to-value ratios are still possible but buyers have to meet some very stringent criteria.
"The BNZ applies an equity premium for loans with a loan-to-value ratio of over 80 per cent, which simply means a marginally higher interest rate to reflect higher risk."
Auckland lenders Cairns Lockie said banks had tightened criteria and finance company collapses meant fewer sources of money.
