Three of Australia’s big four bank have tighten their mortgage rules by tightening lending money offshore customers who are neither Australian citizens nor permanent residents of Australia. ANZ Bank was one of the first banks to tighten its mortgage lending rules rule to borrowers heavily reliant on income from offshore.
ANZ will continue lending foreigners who source 100% of their income from overseas, provided they meet various requirements such as securing approval from Foreign Investment Review Board. Commonwealth Bank made the changes early this month whilst Westpac implemented these new rules this week. SBS reports;
“The changes that ANZ and Westpac in particular have brought in are likely to hurt developers, such as Meriton, who have been targeting Chinese buyers.
Large numbers of Meriton’s Chinese buyers fund their purchases locally, with Westpac one of the largest lenders in the space, and could affect their ability to settle off-the-plan contracts that have exploded in the past couple of years.”
NAB said that its current rules for non-resident buyers stipulate that they must be employed, must meet face-to-face and NAB will only lend up to 70% of the value of the property.
The Reserve Bank earlier this year noted that property prices could decline and bank losses could rise if Chinese demand were to decline significantly, and the changes in bank lending rules could be the start of a downturn.
The move has been welcomed by the Mortgage and Finance Association.
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