The nation’s largest mortgage lender, the Commonwealth Bank of Australia (CBA
), has announced that it is tightening its criteria for home loans for foreigners.
will no longer approve applications for home loans that cite self-employed foreign income, according to a note sent to mortgage brokers this week.
The bank also says it will no longer accept the foreign-currency income of temporary Australian residents. These individuals can also only borrow up to 70% of a property’s value, compared with the previous rate of 80%.
Home loan applications from foreigners make up a "significantly low proportion of our total home loan applications" according to a CBA
statement, adding, “We constantly review and monitor our home loan portfolio to ensure we are maintaining our prudent lending standards and meeting our customers' financial needs."
The fact that home loans for foreigners make up a relatively small segment of the market means CBA
's new policy should not have major consequences for mortgage brokers, according to principal at Ocean Home Loans, Brad Kirwan.
“This is a very small part of the overall market,” he told Australian Broker
. “Self-employed foreign investors are an even smaller part of that market. Most lenders won’t accept foreign self-employed income anyway – I’d suggest that CBA
are aligning their policy with the other major banks so as not to be over-exposed to one particular type of applicant.”
When asked what steps brokers might take in response to CBA
’s changes, Kirwan added, “There are several large brokerages that focus entirely on the Chinese market and have done very well over the past few years, they will obviously have to reassess how they do business in the future, for the majority of mortgage brokers it will be business as usual.”