Non-major cracks down on foreign investors

by Julia Corderoy26 Oct 2015
Bank of Melbourne has announced tougher lending restrictions to foreign investors, particularly mainland Chinese investors, in response to APRA’s efforts to cool the property market and to prevent fraud. 

According to a report by the Australian Financial Review, the non-major wrote to mortgage brokers saying it will tighten scrutiny of visas and foreign-currency income, and abolish low-documentation loans under its migration lending package.

Bank of Melbourne declined an offer from Australian Broker for an interview; however, a spokesperson for the bank told Australian Broker that the non-major considers a range of factors when regularly reviewing its lending policies. 

“Bank of Melbourne and the broader Westpac Group adopt prudent lending procedures that consider a range of factors to determine loan serviceability. Factors include the type of visa the customer holds, and the nature of their income if it's sourced in a foreign currency. These policies are regularly reviewed and updated where appropriate.”  

Bank of Melbourne’s decision follows similar moves by parent company Westpac and non-bank lender Firstmac. In July, Westpac wrote to mortgage brokers to tell them that all applicants must have an Australian visa and confirm to Foreign Investment Review Board (FIRB) requirements. 

Last week, Firstmac announced it was pulling-out of lending to “vertically integrated” development schemes – groups that market, build and sell off-the-plan developments – which typically attract overseas investors.