NAB has become the third major lender to announce tightened lending conditions for foreign buyers.
The new rules, which come into effect on 14 May, will see NAB only lend 60% of a property’s value to foreign buyers, down from 70% previously.
In addition, the major bank will recognise just 60% of foreign income sources, will no longer be accepting foreign sourced self-employed income, and will be tightening income verification requirements.
In a statement provided to Australian Broker, a NAB spokesperson said: “All foreign home loan applications are considered on a case by case basis and assessed under strict verification standards for employment and income, as well undertaking stringent risk processes.
“These settings are continually reviewed, and controls are tightened where necessary. NAB has limited appetite for this segment which comprises less than 2% of the NAB book.”
One mortgage broker, who asked to remain anonymous, also told the AFR that NAB would not be approving any loans to foreign buyers in “high-risk” areas.
These suburbs have yet to be identified, according to the AFR, but are expected to be inner-city areas in Melbourne and Sydney where there is a surplus of newly built apartments.
NAB’s decision follows announcements by Westpac and ANZ that they will be investigating mortgages backed by questionable foreign-income documentation, which forced them to stop approving such loans last month.
Bendigo and Adelaide Bank and Citigroup have also tightened lending conditions for foreign borrowers in the past week.
