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Australian Banks Putting a Stop on Home Loans to Foreigners

Australian Banks Putting a Stop on Home Loans to Foreigners

Australian Banks Putting a Stop on Home Loans to Foreigners

Australia economy concerns over the state of housing market made Westpac the latest to tighten loan policies.

The health of the housing market in Australia draws great concerns to the nation, making the financial district clamping down on home loans to foreigners.

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The latest financial institute Westpac Banking is following four other financial institutes to stop home loans to offshore customers who do not hold a valid residency status. The other financial institutes are Commonwealth Bank of Australia, National Australia Bank and New Zealand Banking Group.

The largest banking facilitators made the change due to the fact of foreign home owners helped drive a jump of 55% in home prices across all the large cities in Australia for the past 7 years.

The scrutiny of tightening the foreign investment in the big cities are due to the rising demand especially from China which triggered concerns that locals being priced out of the local property market.

It is said that Westpac will not accept any applications from foreigners who are non-residents, self-employed and temporary visa holders living overseas. Mortgage brokers had announced the changes and state its priority is to continue “to support Australian citizens and permanent residents living outside of Australia on their journey to own a home or investment property” in the country. The loan-to-value ratio was even reduced from 80% to 70% for foreign mortgage applicants.

On its semi-annual assessment of the financial system by The Reserve Bank of Australia, warned of the Chinese buying Australian homes posed as an “indirect risk”. As government data showed acquisitions of houses and apartments by residents of the world’s second-largest economy doubled for the second consecutive year.

From the month of July, changes in the lending policies by the state government of Victoria in Melbourne, the second-largest city in Australia stated that they will double a property tax for foreigners in move likely to undermine surging property prices.

From July 1, the changes in lending policies come as the state government in Victoria said will double a property tax for foreigners in move likely to undermine surging prices in its capital Melbourne, Australia’s second largest city.

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Angel Real Estate Consultancy

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