LVR, short for loan to value ratio, is the term used in Australia and New Zealand for what is called the loan-to-value ratio (LTV) in the United States, United Kingdom and most other English-speaking lending markets. It is the same calculation under a different regional name: the loan amount divided by the appraised or purchase value of the property being financed, expressed as a percentage.
Australian and New Zealand lenders and regulators, including the banking regulators that set macroprudential policy in both countries, use LVR as a key tool for assessing mortgage risk and, at times, for restricting the share of high-risk lending in the banking system. A loan with a 90 percent LVR means the borrower has financed 90 percent of the property's value and holds only 10 percent equity, which lenders generally treat as higher risk than a lower LVR loan.
For how the ratio is calculated, what drives it, and how lenders use it to price risk and set requirements such as mortgage insurance, see the main Loan-to-Value Ratio (LTV) entry.