With a significant number of high-density property developments due to come onto the market over the next few years and concern over some segments of Australia’s property market, a number of financial institutions have moved to either restrict or tighten lending requirements for foreign investment.
Restrictions range from Citi’s reported ban on key Asian currencies that it will no longer accept as payment for Australian real estate from overseas borrowers because of growing concerns about fraud and possible money laundering to Westpac’s outright ban on all home lending to non-residents and temporary visa holders.
Which institutions are restricting lending to foreign investors?
Below is a summary of the institutions that have, at time of writing, announced lending restrictions on foreign investment for home loans.
| Table: Foreign Lending | |
| Company | Actions taken |
|---|---|
| ANZ | Tightened the lending criteria for foreign buyers and will not accept mortgage applications where 100 per cent of income funding the mortgage application is foreign |
| Commonwealth Bank | Tightened the lending criteria for foreign buyers and will no longer accept applications from applicants using self-employed foreign income for loan servicing |
| NAB | Has tightened lending criteria for foreign buyers, requiring them to have a larger deposit (decreasing the LVR to 60%). No longer recognises self-employed income from overseas |
| Westpac | Stopped lending to foreign buyers and tightening lending criteria for permanent visa holders whose main source of income was from overseas |
| Westpac Group (Bank of Melbourne, St George, BankSA | Stopped lending to foreign buyers and tightening lending criteria for permanent visa holders whose main source of income was from overseas |
| AMP Bank | Has banned foreign lending |
| Firstmac | Tightened lending to both non-residents and investors on high-density apartments |
| Bendigo and Adelaide Bank | Are currently reviewing their lending processes |
| Citi | Has banned some Asian currencies from buying Australian properties |
| ME | Has formalised restrictions on the use of foreign income to service mortgage |
The announcements come at a time when home loan rates have hit a new low across the board. Thanks to the May cut in official cash rate, owner-occupier borrowers with some equity can now potentially lock in a home loan interest rate of less than 4 percent across all loan terms up to and including 5 year fixed.
And investors? Well, home loan interest rates aren’t quite as low for investors, but they’re still pretty competitive. At time of writing, the minimum and average home loan interest rates on offer for investors are higher than for owner-occupiers. Nevertheless there is significant variance between rates on offer – definitely shop around
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