Westpac, Australia's biggest lender to property investors, has brought the bank in line with rival Australian lenders as it lowered the bar for investors seeking home loans.

The bank increased the maximum loan-to-valuation ratio for prospective landlords from 80 to 90 per cent. This means that investors will only need a deposit of 10 per cent of the loan, lower than the previous 20 per cent. Among Australia's four major banks, Westpac was the only one with an LVR of 80 per cent.

Westpac's move marks a partial reversal from the industry-wide clampdown on investor lending last year as the Australian Prudential Regulation Authority sought to limit growth in lending to investors to 10 per cent per year. Westpac then dropped the LVR last July 2015 to 80 per cent from 95 per cent.

The bank, which has a loan book worth $136 billion, had a seven per cent drop in investment lending growth over the 12 months to March from a rate of more than 11 per cent for the first half of 2015.

However, Westpac's move is in contrast with Macquarie Bank's, which restrained lending for almost 50 risky postcodes in more than 100 suburbs across Australia's capital cities. According to Macquarie, mortgage brokers have to advise their buyers to provide at least 30 per cent of the purchase price upfront.

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