NAB has further tightened its policy for lending to non-residents, after announcing LVR changes last month.
A NAB spokesperson said the group regularly reviews its policies to ensure it continues to lend responsibly, as well as to respond to changing market conditions and regulatory requirements.
“We recently made changes to our policy for lending to foreign applicants, which came into effect on Saturday 18 June,” the bank said in a statement to The Adviser.
“Under these changes, applicants will need to provide evidence of existing Australian income in order to be eligible for home lending application purposes.”
In May, the major bank reduced the maximum LVR from 70 per cent to 60 per cent for foreign home loan applicants, and is “shading” foreign income sources from 20 per cent to 40 per cent.
NAB will also no longer accept foreign-sourced self-employed income, and has tightened income verification requirements.
ANZ, CBA and Westpac have all curbed lending to foreign buyers over the last few months.
Meanwhile, Ken Sayer, CEO of Sydney-based mortgage manager Mortgage House, told The Adviser last month that Bendigo and Adelaide Bank had contacted the group and its broker partners, saying it would no longer service loans to overseas borrowers.
The crackdown on foreign buyers has created headaches for developers who have traditionally relied on non-resident pre-sales to secure funding.
Bank of Sydney executive general manager of commercial banking, Fawaz Sankari, said the lender had received an “enormous amount” of inquiries about construction finance.
“There is a huge increase and reliance on foreign investment purchases on the pre-sales side. We have noticed that on the local front, a lot of our long-term solid developers are really struggling to get pre-sales locally,” Mr Sankari told the Vow Financial Commercial Conference on the Gold Coast earlier this month.
“There have been a couple of clients who we have had on 50 per cent pre-sales and they are yet to achieve those. Yes, we want to mitigate our risk, but we also want to help the client mitigate their own risk in terms of biting off more than they can chew,” he said.
“I think a lot of the banks and lenders out there are very concerned about what is going to happen in the next 12 to 18 months.”
Earlier this month, AMP Bank announced non-residents were an “unacceptable borrower type, unless a spouse/de facto is a citizen or permanent resident of Australia or New Zealand and a borrower of the loan”.
[Related: AMP Bank announces major lending changes]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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