Westpac cracks down on foreign lending
Westpac will hike rates for foreign loan customers, it has been revealed.
The bank is set to raise rates by 0.5% on offshore-based customers who are not Australian residents of citizens, the Australian Financial Review has reported. According to the AFR, the change is set to come into effect from next month, and will classify loans to foreign borrowers under a “Non-Resident Reference Rate” category.
A Westpac spokesman told the AFR the changes took into account the lender’s “risk settings, the economic landscape and expected changes in capital requirements for that segment of the mortgage market”.
Banks have increasingly cracked down on foreign investment, with ANZ announcing earlier this year it would refuse home loan applications where income was 100% foreign sourced. Commonwealth Bank stopped accepting mortgage applications from applicants using self-employed foreign income or from temporary residents receiving foreign currency income, while Westpac wound back loan-to-value rations to 70% on loan applications including foreign income.
Property pundits have warned that tighter restrictions on foreign investors could lead to a glut of off-the-plan properties unable to reach settlement.