High-risk loans on the rise as property market heats up The proportion of home buyers taking out loans with deposits of 10 per cent or less increased in the September quarter, as the property market recovery gathered pace. Figures show banks wrote $10.8 billion in higher-risk loans with a loan-to-valuation ratio (LVR) of 90 per cent or more in the quarter - 14.1 per cent of all housing loan approvals. This was a bigger share than in the June quarter, when loans with an LVR of 90 per cent or higher made up 13.5 per cent of approvals. The chief executive of interest rate comparison service RateCity, Alex Parsons, said the share of buyers borrowing up to 90 per cent or more of a property's value was now at its highest level since 2009. "It is creeping back up to levels we haven't seen since the global financial crisis," he said. Mr Parsons said it was critical that people assumed interest rates would rise if they were taking out a new loan. With record low interest rates and higher LVRs, if interest rates increase, that's going to have quite a dramatic impact on consumers' ability to repay those mortgages. The rise in low-deposit lending was revealed in statistics on the $1.2 trillion mortgage market published by the Australian Prudential Regulation Authority on Tuesday. About 20 per cent of all new loans had an LVR between 80 and 90 per cent, and 40 per cent of new approvals had an LVR of 60 to 80 per cent, it said. The rise in low-deposit lending came amid a surge in house prices in the Sydney market in particular, as buyers competed fiercely to snap up properties. With banks also jostling to expand their share in an environment of low credit growth, lenders are under pressure not to ease their lending standards.