Australian banks tighten up on first home buyers

The Commonwealth Bank is now requiring first home buyers to contribute no less than three per cent of the purchase price of the property from out of their own savings.

"Customers who have skin in the game in terms of their own funds are more committed to continue their repayments," said CBA group executive retail banking services, Ross McEwan. "So in the next couple of weeks, we're implementing a policy to require borrowers to contribute a minimum of 3 per cent (of the purchase price) on top of any government grant."

First home buyers can receive $14,000 from the federal government towards the purchase of an existing property or $21,000 towards a new home.

NAB has cut its maximum loan-to-valuation ratio from 100 to 95 per cent. ANZ reduced the LVR's to mortgagees from 95 to 90 per cent.