More Australian lenders have taken a hard-line approach to foreign lending, stopping lending to foreign borrowers or excluding foreign-sourced income from mortgage applications amid growing concerns about fraud.
Citigroup wrote to mortgage brokers yesterday with a blacklist of foreign currencies it will no longer accept as payment for Australian real estate from overseas borrowers, the
Australian Financial Review (
AFR) reported.
The letter, sent by Citi’s head of mortgage distribution, Matt Wood, contained a list of 12 currencies that it will accept and warned that all others are “not negotiable”.
In a statement provided to
Australian Broker, a spokesperson for Citi confirmed at least five currencies have been excluded from mortgage applications.
“We want to continue to ensure we have a robust and healthy residential loan book catering to foreign buyers. In light of recent industry concerns regarding foreign residential loan applications relying on offshore income we have excluded certain currencies to ensure we don’t attract any increases in unwanted loan applications.
“These currencies include the Chinese RMB, Indian Rupee (INR), Indonesian Rupiah (IDR), Malaysian Ringit (MYR) and Taiwan Dollar (TWD).”
Citi’s decision comes after
Westpac and
ANZ announced they will be investigating mortgages that have been backed by questionable foreign-income documentation, which forced them to stop approving such loans last month.
Bendigo and Adelaide Bank has also since warned its network of brokers to halt lending to foreign borrowers and exclude foreign-sourced income. In a statement provided to
Australian Broker, a spokesperson said the non-major has received a “marked increase” in foreign applications.
“Bendigo and Adelaide Bank has always had a policy which allowed funding of expat Australian borrowers and, in certain circumstances foreigners to purchase property in Australia.
“This financial year, in the eight months to end of February 2016, this amounted to new lending advanced of less than $60m.
“In March and April following policy adjustments at other banks, we have seen a marked increase in enquiry and applications, exceeding our risk appetite. As a result we are reviewing our current position in the market.”
The chief executive of
Mortgage Choice, John Flavell, told
Australian Broker he expects more lenders to announce similar bans or restrictions.
“Given the recent developments, I am not surprised to see many of Australia's lenders taking a hard line approach to foreign income lending.
“These policy changes will make it harder for foreign investors to purchase property in Australia using foreign income. Over the coming days and weeks, I expect to see more lenders tightening their policy in this area.”
