Foreign Investors Targeted in Bank Lending Policy Changes
Another Major Bank Makes Significant Changes to Lending Policy
Changes are in the air as another bank has significantly changed their policy.
The change is in respect to borrowers who are based overseas or earn overseas income. Included below is a summary of the changes and why the bank have made these changes.
Summary of the policy changes Effective today, Thursday 9 June:
• No longer lend to non-resident borrowers with overseas income
• The maximum allowable LVR for NZ citizens and permanent residents with overseas income is 70% (from 85%)
• Borrowers on temporary resident visas will only be accepted if they have both a New Zealand address and NZ based income.
What is the difference between a migrant customer and an offshore borrower?
A migrant customer may be a temporary resident visa holder, however their intention is to buy property in New Zealand, they are already working in New Zealand, and eventually gain permanent residency. The customers continue to qualify at a lower LVR.
An offshore borrower earning overseas income intends to purchase in New Zealand for investment or temporary purposes, they may live in New Zealand or offshore. These customers no longer qualify.
Are ex-pat New Zealanders living overseas included in these changes?
New Zealand residents and permanent residents who currently live overseas and earn offshore income (not self-employed or business income) are able to borrow however the maximum allowable LVR has been reduced from 85% to 70%.
Why have they made these Changes:
We believe again as per the announcement by another major bank last week that these measures are being implemented to prevent the Reserve Bank from implementing debt to income ratios.
What also hasn’t helped is the fact that both ANZ and Westpac have been victims of almost $1 billion in Chinese home loan fraud in Australia. These were backed by Chinese fake documents.
Therefore as a consequence it feels our Australian owned banks are now (hopefully not for too long) putting all foreign investors into the same pot until they get a handle on this and investigate Chinese home lending in New Zealand.
Watch this space for further news……