Changes in foreign lending
The beginning of June saw some of the major banks introduce new foreign lending rules. Westpac and ANZ were the first to move, with both institutions announcing it will stop issuing home loans to foreign buyers.
Westpac has said it will no longer lend to non-resident borrowers with overseas income. The bank also reduced the maximum allowable loan to value ratio (LVR) from 85 to 70 per cent for New Zealand citizens and permanent residents with overseas income.
ANZ is restricting home loans to foreign buyers that rely on overseas income. New Zealand passport holders living overseas purchasing a property funded by overseas income were exempt from ANZ’s restrictions.
Bank of New Zealand (BNZ) is the third major bank to make changes, announcing it will no longer recognise foreign income of people who are not New Zealand or Australian citizens, or do not hold a current permanent residency visa, regardless of whether or not they reside in New Zealand.
New Zealand and Australian citizens and permanent residency holders, who are not currently residing in New Zealand and are using foreign income to service a loan, will now have a maximum allowable LVR of 60% through BNZ.
We expect other lenders to follow in the coming weeks.