Three of Australia’s four big banks have stopped lending money to foreigners with temporary visas in Australia. Tightening their lending conditions, the banks have stopped giving mortgages to customers who are not Australian citizens or permanent residents.
Rising concerns about fraud and money laundering among foreign buyers in the Australian property market have sparked the changes.
Westpac is the latest to withdraw from real estate lending to foreigners after ANZ and Commonwealth bank announcing the move earlier this month, the ABC has reported.
It no longer permits any lending to a non-resident, even if the applicant's income is not relied on to meet serviceability.
Australian and New Zealand citizens and permanent visa holders with foreign income will get loans for new houses only. The loan to value ratio for such loans has been reduced to 70 per cent from 80 per cent.
"At Westpac, helping Australians to achieve their goal of owning a home or investment property is core to our purpose. For these reasons, Westpac will no longer lend to offshore customers who are not citizens or residents of Australia with an eligible visa,” ," an email to mortgage brokers said.
The Reserve Bank earlier this year noted that property prices could decline and bank losses could rise if Chinese demand were to decline significantly, and the changes in bank lending rules could be the beginning of a downturn.
