Major bank cuts lending to foreign buyers
Options for foreign buyers in Australia are shrinking as another major bank has pulled back on lending to foreign investors.
Westpac has announced it will stop lending to non-residents and temporary visa-holders for residential property purchases.
"In line with Westpac Group's responsible lending practices, we have strengthened our policies regarding non-residents lending and foreign income, which represent a very small component of our loan book," a Westpac spokesman said, according to Fairfax.
Buyers who are resident in Australia may also be impacted by the changes. The bank said it would also limit loan applications including foreign income to 70% loan-to-value ratio.
According to The Australian Financial Review, a Westpac spokesman said loans that have been pre-approved will be honoured for 90 days from the pre-approval date. The changes took effect from 26 April, and will apply to pre-approved loans that have not been issued or activated within 90 days of approval, The AFR reported.
The move makes Westpac the third major bank to put the brakes on foreign buyers. ANZ recently announced it would refuse applications where income was 100% foreign sourced. Commonwealth Bank also announced it would no longer accept mortgage applications from applicants using self-employed foreign income or from temporary residents receiving foreign currency income.
Tighter lending rules could be slowing investment from offshore buyers. Recent figures from NAB, the only major bank yet to announce restrictions on foreign buyers, show foreign demand for property has fallen to a two-and-a-half year low. The RBA has warned of the impact such a slowdown could have on Australian property prices.