Two major banks have announced they will stop lending to offshore home buyers and Labour says it's confirmation the market is out of control.
Westpac has confirmed that they have tightened policies in relation to lending and foreign income for non-residents, effective today.
The changes mean that Westpac will no longer lend to non-resident borrowers with overseas income.
For New Zealand citizens and residents with overseas income, Westpac's loan-to-value ratio has been steeply increased, meaning buyers will need to deposit 30 per cent of a property's value, up from 15 per cent.
Borrowers on temporary resident visas will be accepted only if they have a New Zealand address and a New Zealand-based income, the bank said.
ANZ has also announced a tightening in its lending policies, with Fairfax reporting that the measures include:
- A maximum LVR of 70 per cent is applied
- Loans are restricted to owner-occupied properties
- Boarder income is not permitted
- No interest-only lending will be available
- ANZ Flexible Home Loan will not be available
- Loans will not be available for the purchase of bare land or construction
- Lending is only available to individuals
- Refinances are available, however no additional lending is permitted
- No cash contributions available
- Existing pre-approvals will be honoured
It's understood that New Zealand passport holders living overseas and earning overseas income will be exempted from the restrictions.
Labour's Grant Robertson has welcomed the announcement, saying the banks appeared to be limiting their exposure in case the housing market falls over.
"It's the goal of a bank to make money from mortgage lending," he said.
"If they are pulling back from lending on New Zealand housing, then there really is a crisis in the market."
Mr Robertson says the banks are acknowledging a crisis the government won't admit exists.
Opposition parties have persistently blamed foreign investors for adding to Auckland's soaring house price inflation.