Westpac imposing RBNZ's new home lending rules from today

Wednesday 20th July 2016

Westpac Banking Corp has announced it will not take any new loan applications from property investors who do not have a 40 percent deposit from 4.30pm this afternoon, some six weeks earlier than required by the Reserve Bank.

The central bank yesterday said it intends have the new lending restrictions in force by Sept. 1 and asked lenders to comply with the spirit of the new regulations immediately.

In a statement, Westpac said the timelines were "a shorter transition period allowed than in 2013 and 2015, when there was a six month period to make all the necessary adjustments and comply".

The RBNZ plans to extend mortgage lending restrictions on Auckland property investors to the rest of the country, making them more onerous by requiring a bigger deposit and reintroducing a uniform national cap on highly leveraged owner-occupier mortgages. The proposed changes would cap property investor loans with less than 40 percent as a deposit to just 5 percent of lending and restrict owner-occupiers with less than a fifth down to 10 percent.

"LVR restrictions to date have improved the resilience of bank balance sheets by reducing banks' exposure to riskier mortgages," governor Graeme Wheeler said on Monday. "This policy initiative is intended to further improve the resilience of bank balance sheets, and it will assist in restraining credit and housing demand."

BusinessDesk.co.nz

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