This article is from the Australian Property Journal archive
AUSTRALIA’s largest mortgage lender, the Commonwealth Bank, is following in the footsteps of ANZ and National Australia Bank by restricting home loans to foreign buyers of Australian real estate.
The CBA’s move comes after the RBA warned in its recent Financial Stability Review that whilst the Australian banking system’s direct exposure to Chinese property investors and developers appears to be small, if demand were to decline significantly, that could weigh on domestic property prices which would lead to losses on the banks’ broader property-related exposures.
The CBA underwrites one in four home loans in Australia.
In a notice to mortgage brokers, the CBA said it would no longer approve applications that cite self-employed foreign income and would not accept foreign income of temporary residents.
Furthermore, the bank has reduced the limit to foreign buyers of real estate, who can borrow up to 70% of the value of a property – down from 80%.
The CBA said whilst loans to foreigners represent a significantly low proportion of its total home loan applications, it is constantly reviewing and monitoring the home loan portfolio to ensure that, “We are maintaining our prudent lending standards and meeting our customers’ financial needs.”
The CBA is the third of the big four to tighten restrictions on foreign buyers, along with ANZ and NAB.
Westpac said it is has not changed its lending criteria.
Australian Property Journal
