Superfund-owned lender, ME Bank is the latest lender to announce severe foreign investment restrictions amid growing fears about fraud and money laundering.
In a confidential note sent to mortgage brokers week, the non-major announced a lending ban on any proposed borrower who is not permanently residing, or employed, in Australia or New Zealand.
In a statement provided by ME, the bank said it has been forced to make these changes following the moves by the major banks to crack down on mortgages to foreign buyers.
“Last year we formally restricted mortgage borrowing to Australian citizens/PRs and NZ citizens living and working in Australia, although this has never been a major segment for us. Recently, in line with industry moves, we also formalised our restrictions on the use of foreign income used to service mortgages, including Australian citizens/PRs working &/or employed overseas.
“The primary driver for the latter is the ability to verify the foreign income. For a bank our size, it is difficult for us to put in place processes at suitable costs to manage this segment.
“These are prudential measures designed to ensure our flow of new business in line with our target market. This is particularly important in light of changes by the majors which can increase demand for smaller banks who haven’t also applied the same policy.”