BNZ's foreign investor restrictions target expats
BNZ has become the latest bank to stop lending to foreign property investors who earn their money overseas.
The bank says it won't recognise foreign income of people who are not New Zealand or Australian citizens, even if they reside in New Zealand.
The bank is also cracking down on New Zealanders and Australians living overseas and trying to pay a mortgage in New Zealand. They will now only be able to borrow 60 percent of the value of a property.
And the bank has got even tougher, saying it will not take into account all of the income earned overseas. This means if a customer is a New Zealand or Australian citizen who is living and earning income overseas, only 60 percent of that income will be taken into account when considering whether they can service a new home loan.
BNZ's decision follows two of the country's biggest banks which have tightened up their rules for lending to property investors.
Westpac is no longer offering its special home loan rates to property investors. It is now offering them only to owner occupiers.
And New Zealand's biggest mortgage lender ANZ is no longer making new loans to property investors buying apartments off the plans, or buying empty sections. It has also changed another of its rules for Auckland investors, removing what is known as the combined collateral exemption.
"We routinely fine-tune our lending rules to take account of current market conditions. As a responsible lender we want to make sure people are in a position to comfortably repay their home loans," ANZ says.
"The price of Auckland's houses is the result of more demand than supply. Until that is addressed the prices of Auckland houses will continue to be high. We're committed to helping Kiwis into their homes and we will continue to assist customers with their plans for home ownership. We'd encourage customers to talk to us about their home loan needs."
Mortgage Supply Company director David Windler says it looks like the banks are taking it upon themselves to "slow it down a little bit, perhaps turn the tap off slightly, rather than having the Reserve Bank come and turn things off".
"I don't think it's a bad thing, I think it should even up the playing field a little bit and put back in place perhaps some sensible measures.