ANZ, Westpac find mortgages backed by dubious foreign income
Two of Australia’s largest lenders, which tightened home loans to some foreigners, said they uncovered mortgages backed by questionable overseas-income documentation.
Australia & New Zealand Banking Group and Westpac Banking Corp have identified issues with some loans that rely on foreign income for approval, the two lenders said in separate emails.
The statement comes after the two lenders last month stopped new loans to offshore customers who are not citizens or who do not hold appropriate residency visas. The banks also stopped the use of foreign income for such customers to qualify for a loan.
The changes made by the biggest banks in the country are part of a broader scrutiny of foreign buying of Australian homes, which has helped drive a 55 per cent jump in home prices across the nation’s capital cities in the past seven years.
Rising demand, particularly from China, has triggered community concern that locals are being priced out of the property market, prompting the government to tighten scrutiny of foreign investment.
“Our delinquency rate on foreign-income loans is lower than the portfolio average, and a large proportion of these loans are ahead on repayments,” Westpac’s Sydney-based spokesman David Lording said in an email. “Overseas borrowers are also well secured.”
The Chinese appetite for Australian residential properties has continued to accelerate.
Buyers from the world’s most populous nation made 87 per cent more purchasing inquiries in Australia with real estate agents and developers in 2015 than a year earlier, according to new data from Juwai.com, a portal that lists real estate around the world for buyers from China.
More than half of them are seeking property in the A$200,000 to A$500,000 range, and the top motivation was education, according to the report released in April.
ANZ said the issue plagued only a “small number” of borrowers and the loans were performing better than average.