CBA’s New Zealand subsidiary, ASB Bank, has issued a notice to home loan customers advising them that those hoping to borrow with a less than 20% deposit will have pre-approvals withdrawn on October 4.
The move comes as lenders rush to slow lending rates in order to meet the Reserve Bank of New Zealand’s new ‘speed limit’. The RBNZ's limit on high LVR mortgages starts October 1, meaning all banks will only be allowed to lend 10% of their new home loans to borrowers with less than a 20% deposit. However, lenders currently have a large numbers of pre-approved high LVR loans waiting to be processed.
According to local Fairfax news reports, ASB has apologised to customers for the sudden move and has urged them to revisit the bank in order to either increase their deposit or look for a cheaper house.
It refused to say how many pre-approved loans and people were affected, citing commercial sensitivity.
ASB's general manager product and strategy, Shaun Drylie, told Fairfax that ASB, like all New Zealand banks, must comply with the new regulations
"We appreciate that this will be disappointing for customers who are impacted and we apologise for any inconvenience caused."