Requiring new borrowers to have a greater  4  5  equity contribution in their house purchases reduced the overall riskiness of banks’ mortgage portfolios. When LVRs were introduced in October 2013, 21 percent of the stock of mortgage lending across the banking system was at LVRs of 80 percent or higher.
With a third of new mortgage lending at that time taking place at LVRs of 80 percent or higher, the overall stock of high LVR mortgages was likely to approach 25 percent. As a result of the LVR restrictions, the stock of highly leveraged loans across the banks’ mortgage portfolios is now around 8 percent.