Final answer:
A lower loan to value ratio indicates a higher owner's equity, which results in reduced risk for the lender. This does not directly correlate with higher interest rates or loan amounts. Instead, lower risk could lead to lower interest rates.
Step-by-step explanation:
- The question concerns the relationship between the loan to value ratio and various factors in the context of a loan.
- If the loan to value ratio is lower, it implies that there is a higher equity contribution by the owner, which in turn lowers the lender's risk. Therefore, the lower the loan to value ratio, the higher the owner's equity is.
- In contrast, the interest rate and loan amount do not necessarily increase with a lower loan to value ratio; in fact, lower risk could lead to a lower interest rate.
- Conversely, the lender's risk is higher when the loan to value ratio is high, as it indicates a smaller equity buffer in case the loan defaults.