Thursday 9th June 2016
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Two of New Zealand's biggest banks have imposed new restrictions on overseas property buyers.
In a statement, Westpac Banking Corp said it would no longer lend to non-resident borrowers with overseas income, while the maximum allowed loan to value ratio for New Zealand citizens and permanent residents with overseas income would be reduced to 70 percent from 85 percent.
Borrowers who are on temporary residence visas will only be accepted if they have both a New Zealand address and a New Zealand income.
Westpac said the changes were imposed as part of an "ongoing review of lending criteria in a fast moving market". It added that verification of foreign applications was essential to meet its lending criteria "but is operationally difficult in these cases".
The changes are effective immediately.
ANZ Bank New Zealand is also overhauling its home loan policies for applications that rely on overseas income. A maximum loan to value ratio of 70 percent is applied and will not be lent on investment properties. No interest only mortgages will be issued and boarder income won't be taken on board.
The changes won't affect a New Zealand citizen living abroad who is buying a home in New Zealand.
A spokesman said the changes were being made to "ensure that ANZ is appropriately positioned in the current housing environment, taking into account supply pressure in certain areas. We remain committed to helping customers into their homes and will continue to assist buyers with their plans for home ownership."
A spokeswoman for Bank of New Zealand said that "it's a situation we're constantly reviewing, but we have nothing to announce". A spokesperson for ASB Bank confirmed they had made no changes "ASB keeps its credit criteria under review to reflect current market conditions and, to date, has made no change to the home loan lending policy for non-New Zealand residents".
Kiwbank also responded to the development by confirming it had made no changes "That's never been part of our target market. Our objective is to get New Zealanders into New Zealand homes, However we haven't got a blanket exclusion at this stage."
Labour's finance spokesman Grant Robertson said banks were acting while the government had its head in the sand: "This shows the banks are acknowledging the housing market is out of control and foreign speculators are playing a big role, so they are limiting their exposure if it falls over".
Banks in Australia have in some cases stopped lending to non-residents and temporary visas holders because of concerns about the risks involved.
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