While most of the big banks will only lend up to 80% LVR on standard rates and then charge a low equity premium for home loans above this level, Kiwibank has gone the other way.

It has removed its LEP. The premium was generally another 20 basis points added to the standard rate.

Kiwibank says it has not changed its lending policy around LVR values as it always lent above 80% LVR.

On occasion it charged an additional rate premium on the appropriate term at the time.

The last rate/term this applied to was its two-year fixed rate.

"All we have done is merely remove this  condition from our rates at present so will not be charging an additional rate as previously identified on any terms, no other changes have been made," it says.

This change indicates a slight loosening of policy and will make it easier for borrowers who don't have a 20% deposit to get into the housing market.

Last month Westpac eased its lending threshold from 80% to 90%.

Kiwibank spokeman Bruce Thompson says the change has come about because Kiwibank has altered its risk management. In the past it had only insured part of the loans, now it insures all its loans.

No figures were available on the costs to customers, however he said that it should end up in being cheaper for borrowers.

Kiwibank uses QBE for its mortgage insurance.

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