BNZ will no longer recognise foreign income for people who aren't New Zealand or Australian citizens, or hold permanent residency, irrespective of whether they live in New Zealand or not.
Bank of New Zealand has joined ANZ Bank New Zealand and Westpac Banking Corp's local unit in restricting mortgage lending for foreign property buyers, following similar steps by their Australian parents.
The local unit of National Australia Bank will no longer recognise foreign income for people who aren't New Zealand or Australian citizens, or hold permanent residency, irrespective of whether they live in New Zealand or not, it said in a statement. The bank will also impose a maximum loan to value ratio of 60 percent for New Zealand and Australian citizens not currently living in New Zealand but using foreign income to service a loan.
"As part of being a prudent lender, BNZ is constantly reviewing and adapting our lending criteria to reflect current conditions, and as a result we are changing our policy on how we recognise foreign income for lending," a spokeswoman said. "BNZ has a robust income verification process for all lending and these policy changes reflect our commitment to implementing best practice policies for our wide customer base."
The New Zealand lenders have been following their Australian parents in either getting out of mortgage lending to foreign property buyers altogether or imposing higher hurdles in doing so. Last month, the Australian Financial Review reported two of Australia's major banks - ANZ and Westpac - discovered hundreds of home loans were approved backed by fraudulent Chinese income documents.
Closer to home, New Zealand Police's Financial Intelligence Unit has found banks' reporting of suspicious transactions gradually increased through the first two quarters of 2016, as processes improve and anti-money laundering legislation becomes more evolved.
BNZ had $543 million of mortgages loans to overseas borrowers as at March 31, compared to $32.65 billion of residential property loans to New Zealanders, its March disclosure statement shows. Total overseas financial assets - the majority of which are for New Zealand assets - was $8.78 billion, including $3.83 billion from related entities.
Westpac and ASB didn't break out geographic credit exposures in their March disclosure statements, while ANZ's document showed it had $2.47 billion of net loans overseas as at March 31, compared to $107.96 billion of loans in New Zealand.
The lender yesterday said it was reviewing the situation when ANZ and Westpac announced similar changes. Commonwealth Bank of Australia subsidiary ASB Bank said it's reviewing its policy but hasn't made any changes.
(BusinessDesk)
