BNZ, Westpac, ANZ restrict foreign lending

Westpac said it would no longer lend to non-resident borrowers with overseas income. Those with a temporary visa would be accepted only if they had an address and income in New Zealand.

The bank has also announced that its special home loan rates are no longer available to investors.

ANZ is following suit with restrictions on foreign buyers – they will only be able to borrow up to 70% of a property’s value and only to buy owner-occupied properties. They will not be able to get loans for bare land or construction and will not be able to take out any interest-only lending.

ANZ has also tightened its lending criteria to residential property investors by stopping lending for empty sections, and apartments off the off the plan.

BNZ joined them on Friday - saying it would not loan to people with foreign income who were not citizens or have permanent residency. 

A maximum allowable loan to value ratio (LVR) of 60 per cent would also be required of New Zealand and Australian citizens and permanent residency holders who used foreign income to service a loan but did not reside in New Zealand.

Data from Land Information New Zealand in May showed 3% of homes were sold to overseas residents in the first three months of 2016.

Property investment commentator Olly Newland said foreign buyers did not have a significant impact on the market.

But he said the message created by the banks’ moves would have a bigger effect.

“It’s saying we don’t want you, go away, don’t interfere in our market, you’re spoiling it, that’s the style of message.”

Banks were doing the Reserve Bank’s job for it, he said, and allowed the Government to avoid having to get its hands dirty by intervening. “It’s very elegant,” he said.

Newland said any foreign buyers who wanted to get around the rules would be able to do so, such as by appointing a proxy in New Zealand to act for them.