As competition for homes heats up, survey data from consultancy Digital Finance Analytics shows the average LVR for new home loans issued to first-home buyers has been steadily rising, to 80.8 per cent in the September quarter compared with 74.8 per cent a year earlier. While banks maintain they are not cutting lending standards, the consultancy's founder, Martin North, said the trend suggested big banks were easing their underwriting criteria slightly, and becoming more aggressive in trying to win customers.

''My read is that the banks are being a little bit more aggressive. They want to grab a larger share but they are relatively conservative overall,'' Mr North said.

Some first-home buyers were borrowing ''well above'' 90 per cent of the property's value in response to fierce competition, he said. The same trend last week prompted ME Bank to raise its maximum LVR to 97 per cent, including the cost of mortgage insurance.

As well as first-home buyers, investors are also funding a greater share of their purchases with borrowed money.

The average LVR for new loans to investors rose to 77.9 per cent in September, compared with 76.5 per cent a year earlier and 73.2 per cent at the same time in 2011, Mr North's figures show. Bankers say a likely reason for the rise is the growing popularity of interest-only loans, which do not require the borrower to pay back the loan's principal.