Westpac tightens residential lending to foreign buyers

Westpac has decided to stop lending to offshore customers who are not citizens or residents of Australia with an eligible visa.

“It continues to be Westpac's priority to support Australian citizens and permanent residents (including applicable visa classes) living outside of Australia on their journey to own a home or investment property in Australia,” the bank said.

Effective immediately, changes to applicants earning foreign income policy will also occur.

For non-residents, no lending is permitted even if the applicant income is not relied on to meet serviceability, a letter to brokers obtained by Mortgage Business advised.

Local applications that include foreign income will be given a lower loan-to-value ratio of 70 per cent, down from 80 per cent. 

The new policy from April 26 will apply to all loans that were pre-approved but have not been issued. 

Last week developers said any withdrawal of bank lending could lead to a possible self-fulfilling fear of "apartment collapse". 

"The problem is they [Chinese buyers] don't know how much the banks will give till the end," the Meriton boss The Docklands Residences said. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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