The proportion of new home loans going to borrowers with small deposits rose in the September quarter, as the property market recovery gathered pace.

New figures show banks wrote $10.8 billion in loans with a loan-to-valuation ratio of 90 per cent or more in the quarter – 14.1 per cent of all housing loan approvals.

This was a higher share than the June quarter, when loans with an LVR of 90 per cent or higher made up 13.5 per cent of approvals.

The rise in low-deposit lending was revealed in statistics on the $1.2 trillion mortgage market, published by the Australian Prudential Regulation Authority on Tuesday.

About 20 per cent of all new loans had an LVR between 80 and 90 per cent, and 40 per cent of new approvals had an LVR of 60 to 80 per cent, it said.

The rise in low-deposit lending came amid a surge in house prices in the Sydney market in particular, as buyers competed fiercely to snap up properties.

With banks also competing to expand their share in an environment of low credit growth, lenders are under pressure not to ease their underwriting standards. 

The credit rating agency Moody's on Tuesday acknowledged the risk of a slide in lending standards, as it reaffirmed its "stable" outlook for the big banks.

It noted evidence of more low-deposit loans being written, but said banks' outstanding loan books had LVRs below 50 per cent.

"There are signs that the low credit-growth environment is raising the level of competition in lending, the profit impact of which is somewhat offset by an easing in deposit competition," it said.

It also said there were signs of increased competition and some looser business lending standards, but debt use by companies was near "historic lows."

Previous figures from Digital Finance Analytics have also showed LVRs were rising for first home buyers and investors in particular.