The banks have been warned by the RBA recently to stop chasing increased profits and get used to single digit growth.
Increasing LVR is a dangerous game. It does bring in new clients but also increases the chances of negative equity and default. I guess the banks are covered somewhat by mortgage insurance giving them a 20% buffer. I wonder if mortgage insurers will start to raise premiums or put pressure on banks to lower their LVR's now that defaults are increasing somewhat?
