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NAB tightens lending criteria for non-residents

by Huntley Mitchell10 minute read
The Adviser

National Australia Bank has followed the other three major banks in tightening its mortgage lending criteria for non-residents.

Effective since Saturday, NAB has 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.

Furthermore, the bank will no longer accept foreign-sourced self-employed income, and has tightened income verification requirements.

“All foreign home loan applications are considered on a case-by-case basis and assessed under strict verification standards for employment and income, as well [as] undertaking stringent risk processes,” a NAB spokesperson told Mortgage Business.


“These settings are continually reviewed and controls are tightened where necessary. NAB has limited appetite for this segment, which comprises less than 2 per cent of the NAB [loan] book.”

Recent claims of mortgage fraud by non-resident home loan customers of Westpac and ANZ sparked strong reactions from both banks.

“We take any allegation of fraud very seriously. Any potential fraud is thoroughly investigated,” a Westpac spokesperson said.

“This will involve contacting customers to seek further information and to verify the information they have provided in their application. We also liaise with the appropriate regulator and the police as required.”

An ANZ spokesperson said the major has made changes to its foreign borrower policy and is also reviewing a number of brokers.

“Of the relatively small number of existing borrowers where we believe there are issues with income documentation, these are generally genuine owner-occupiers who have LVRs less than 80 per cent, and the loans are performing better than the portfolio average,” the spokesperson said.

“All our analysis to date indicates the issue is relatively small and there is no material credit risk issue involved.”

CBA has announced similar lending measures regarding non-residents, while Bendigo and Adelaide Bank has told mortgage managers and brokers to cease lending to non-residents amid growing concerns about fraudulent loans and money laundering.

According to The Australian Financial Review, Citi has a confidential blacklist of foreign currencies it will no longer accept as payment for Australian property from non-resident borrowers “because of growing concerns about fraud and possible money laundering”.

[Related: ANZ reviewing brokers over mortgage documents]

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