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No deposit home loans are under threat as banks tighten lending criteria due to the economic crisis. ANZ, which is Australia's biggest lender, is restricting loans to 90 per cent of the property price, and now The Commonwealth Bank (CBA) is pulling the plug on it's zero deposit home loans. 
From December 1 the CBA will lend up to 80 per cent of the property value without mortgage insurance, borrowing up to 95 per cent will result in borrowers having to pay for mortgage insurance. The CBA says 95 per cent is the highest a new borrower can apply for.
A spokeswoman for the Commonwealth Bank, Nichole Ismay, said of the
withdrawal of the zero deposit loan: "We may be able to offer it at a
future stage … but have taken the view that it is not prudent to offer
this product to customers at this time."
Most lenders will now move to tightened lending criteria, meaning that borrowers will need at least a 10% deposit. Some mortgage brokers are concerned that this will discourage many first home buyers, despite the recent interest rate cuts and the increase to the First-Home Buyer Grant which was announced last month.
The Reserve Bank of Australia is tipped to cut rates by a further 50 basis points when it meets in December. Any cut will the be fourth consecutive rate cut and shows that the RBA is still concerned about keeping the Australian economy out of recession.
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