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RBA Glossary definition for LVR

LVR – Loan-to-valuation ratio

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The Determinants of Mortgage Defaults in Australia – Evidence for the Double-trigger Hypothesis

22 Jul 2020 RDP 2020-03
Michelle Bergmann
Figure 3: Distribution of Indexed LVRs. Balance-weighted share of securitised loans, June 2019. ... 0.89. Equity and housing market factors. Indexed LVR buckets (selected; base = 60–70).
https://www.rba.gov.au/publications/rdp/2020/2020-03/full.html

Results

22 Jul 2020 RDP 2020-03
Michelle Bergmann
0.89. Equity and housing market factors. Indexed LVR buckets (selected; base = 60–70). ... Figure 11: Stage One Hazard Ratios – LVR. Event: entries to 90+ day arrears.
https://www.rba.gov.au/publications/rdp/2020/2020-03/results.html

Appendix A: Summary Statistics and Variable Definitions

22 Jul 2020 RDP 2020-03
Michelle Bergmann
337,300. 296,100. 299,500. 293,200. Median indexed LVR. (c). 67. 72. 64. ... Variable name. Variable definition. Unit. Sources. Indexed scheduled LVR. Scheduled balance / (most recent property valuation x SA3 region housing price index).
https://www.rba.gov.au/publications/rdp/2020/2020-03/appendix-a.html

Discussion

22 Jul 2020 RDP 2020-03
Michelle Bergmann
The relative hazard ratio for indexed LVRs was slightly smaller, at 1.3. ... Hence the probability of foreclosure may be higher at all LVR levels in a regional shock.
https://www.rba.gov.au/publications/rdp/2020/2020-03/discussion.html

Data Description

22 Jul 2020 RDP 2020-03
Michelle Bergmann
A loan is defined as having negative equity if its indexed LVR is above 100 (i.e. ... Figure 3: Distribution of Indexed LVRs. Balance-weighted share of securitised loans, June 2019.
https://www.rba.gov.au/publications/rdp/2020/2020-03/data-description.html

Estimation Strategy

22 Jul 2020 RDP 2020-03
Michelle Bergmann
Equity is measured by indexed scheduled LVR, which is specified as buckets in the model. ... Of particular concern may be the potential correlation between regional unemployment rates and housing prices, which are incorporated in the indexed LVR estimates
https://www.rba.gov.au/publications/rdp/2020/2020-03/estimation-strategy.html

Stylised Facts

22 Jul 2020 RDP 2020-03
Michelle Bergmann
Figure 6: Cumulative Transitions. Transitions of securitised loans in 90+ day arrears, by indexed LVR. ... Footnotes. This figure is based on the indexed LVR at the point of entering arrears; results are little changed after accounting for subsequent
https://www.rba.gov.au/publications/rdp/2020/2020-03/stylised-facts.html

Appendix C: Robustness Checks – Multinomial Logit Models

22 Jul 2020 RDP 2020-03
Michelle Bergmann
Full repayment. Model stage:. One. One. Two. Two. Two. Indexed scheduled LVR (base = (50,60]). ... Original LVR (base = (0,60]). (60,80]. 1.013. (0.37). 1.035. (4.94). 0.867.
https://www.rba.gov.au/publications/rdp/2020/2020-03/appendix-c.html

Appendix B: Full Results

22 Jul 2020 RDP 2020-03
Michelle Bergmann
Base. Excl SEIFA. Base. Base. Base. Base. Indexed scheduled LVR (base = (60,70]). ... Base. Base. Indexed scheduled LVR (base = (60,70]). (0,30]. 0.783 (0.127).
https://www.rba.gov.au/publications/rdp/2020/2020-03/appendix-b.html

Conclusion and Policy Implications

22 Jul 2020 RDP 2020-03
Michelle Bergmann
While this suggests that policies aimed at lowering LVRs at origination can be useful in reducing the probability that borrowers experience negative equity and thereby lower the risk of foreclosures, this
https://www.rba.gov.au/publications/rdp/2020/2020-03/conclusion-and-policy-implications.html