Westpac has announced it will no longer loan money to foreigners wishing to purchase residential property in Australia.
The bank and its subsidiaries (St George, Bank SA and Bank of Melbourne) ceased property lending to all non-residents and temporary visa holders as of April 26. Westpac is the third major bank to clamp down in this way, following announcements from ANZ and Commonwealth Bank earlier in April.
Australian and New Zealand citizens whose main source of income is from overseas will also be affected. They are restricted to loans for new housing only, with the maximum amount that Westpac will lend them falling from 80% to 70% of the total purchase price.
An email sent by Westpac to mortgage brokers said, “At Westpac, helping Australians to achieve their goal of owning a home or investment property is core to our purpose.
“For these reasons, Westpac will no longer lend to offshore customers who are not citizens or residents of Australia with an eligible visa."
The news may spark fears of a slowdown in residential construction, with developers potentially taking a hit. In particular, Meriton has been targeting the Chinese market and may have to rethink strategy.
MFAA CEO Siobhan Hayden said of Westpac’s decision, “Westpac's policy change... reflects a prudent decision for a more balanced portfolio at this time and reduced exposure for the bank.”