Major bank continues foreign loan clampdown

Major bank continues foreign loan clampdown
Major bank continues foreign loan clampdown

Westpac are set to increase interest rates for foreign mortgage customers, writes the Australian Financial Review.

The bank is reported to be introducing a new loan category next month, a 'Non-Resident Reference Rate'.

Off-shore based customers who currently have loans with the bank will have to pay a 0.5% higher standard variable rate.

A Westpac spokesperson told the Australian Financial Review that the higher rates took into account the bank's "risk settings, the economic landscape, and expected changes in capital requirements for that segment of the mortgage market”. 

The decision comes after a long crackdown by the major banks on foreign lending.

Westpac announced, as of April 26. it would no longer loan money to foreign home buyers seeking to purchase residential property.

The bank has not settled any new mortgages from offshore-based clients since then.

Other major banks such as NAB and ANZ have also introduced similar policies halting new loans to foreign buyers.

Westpac has also dropped its loan to valuation ratios (LVRs) from 80% to 70% for local applications that include foreign income.

Tags: 
Interest Rates Westpac

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