- Foreign investors in big trouble as major Australian banks pull the plug
- Expats now face tighter lending criteria including higher deposit requirements
- Second-tier banks and niche lenders have moved in to fill the lending gap
Australia’s biggest lenders have tightened the screws on expats following a string of fraudulent loans from China and after coming under pressure from the regulators.
The shock move now requires Australians living overseas or earning a foreign income to put up more cash if they want to be considered for a home loan in Australia.
However, this is nothing compared to the trouble foreign investors are now facing.
“Foreign investors are in bigger trouble as most Australian banks have completely pulled the plug,” explains Otto Dargan, managing director with Home Loan Experts.
Westpac and St George, in particular, are now imposing very strict lending policies for both expats and foreign investors.
“They used to lend up to 95% of the property value for Australian expats and 80% for foreign investors. Now they’ve cut down their lending to just 70% of the property value for Australian expats and are declining all foreign investors,” says Dargan.
What this means is that expats will now need bigger deposits and will pay higher rates with some lenders.
St George now requires expat borrowers to prove that they have the right to live and work in the country that they are living in. This means that their visa conditions will be scrutinised.
ANZ has also increased verification requirements for Australians living overseas and now rejects all foreign investors.
“Some banks have also withdrawn pricing discounts for people living overseas,” says Dargan. “What this means is that most Australians living overseas have high interest rates and should consider refinancing their loan.”
“Foreign investors are in a precarious situation especially if they have purchased properties off-the-plan and need to apply for a home loan within the next two years. If they’re unable to get a mortgage to settle, they may lose their deposit,” Dargan explains.
Fortunately for expats and foreign investors, Australia’s second tier banks and specialist lenders have moved in to fill the gap.
“Currently, expats can still borrow up to 95% with some lenders and foreign investors can borrow up to 80% of the purchase price when buying a property in Australia. Some lenders are also offering negotiated interest rates for expats who are refinancing their loans. However, we aren’t sure if this will continue,” says Dargan.
About Home Loan Experts:
Home Loan Experts is one of Australia’s leading specialist mortgage brokers.
Founded in 2006 by managing director Otto Dargan, the brokerage specialises in no deposit, unusual employment, non-residents and bad credit, as well as first home buyers, investors and discounts for professionals.
With a loan book of more than $1 billion, Home Loan Experts has won a number of industry and consumer awards including being named one of the top 10 independent brokerages of 2014 and winning the ‘Best Customer Service’ category in the 2015 and 2016 Better Business Awards as well as the ‘Major Brokerage Of The Year – Non-Franchise’ in the 2015 Australian Broking Awards.
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