Adelaide Bank yesterday said that low documentation home lending constituted about 20 per cent of their volume of new loans, which would seem to confirm the bank as the most aggressive provider of loans in this category.The bank also insists, in common with every other provider of low doc loans, that they are no riskier than any other category of home lending. This journal yesterday quizzed Adelaide's chief financial officer, John Patton, about the bank's lending, and the significance of the Australian Prudential Regulation Authority's proposal to increase the risk weight on some low doc loans.In ringing around other lenders to see what it is that APRA's fussed about, a lot of them point to Adelaide Bank. So would you explain how much of Adelaide's home loan book is low doc, and how the bank manages those loans?About 20 per cent of our book would potentially come under the category of low doc lending. The 20 per cent would be new business, so in terms of the overall portfolio it would be something less than that, maybe in the order of 10 per cent.We fully understand where APRA is coming from. All banks have been relatively conservative in their approach to low doc lending, because its a relatively new product area. In terms of other banks, we can't really speak for them. We have been one of the first to the market.Certainly when we went down this path two and a half year ago, we insisted on mortgage insurance on every single loan. Our data indicates that low doc lending is no different to our standard portfolio, so we have been able to relax those criteria over a certain period of time.Can you explain the relaxation in the criteria?The maximum LVR [loan to valuation ratio] that we will lend in low doc is 80 per cent. We insist on mortgage insurance where the LVR is above 75 per cent, and we require independent valuations.That sounds like some of Adelaide's low doc lending would be weighted at 100 per cent for capital adequacy purposes under APRA's proposals.There would be a very small proportion of new business that would potentially be 100 per cent risk weighted. That's assuming we've maintained our current approach.What's your assessment of the merits and ramifications of APRA's proposed tightening of the rules on low doc loans.It was a reasonably balanced approach APRA's taken. From APRA's point of view, they are concerned at this style of lending, and want to introduce new criteria.APRA's critics contend that APRA's acting unreasonably in targeting low doc loans, and that there's little evidence to support their proposed intervention.There is no evidence to be worried about this. All our data shows they behave the same way as standard mortgages. And Adelaide Bank, like most other banks, have deliberately tailored the offering to be more conservative.If arrears or low losses were to kick up in home lending, what segments of the book would you expect to be affected.It is the higher LVR loans that