KEY POINTS:
ANZ National, the largest bank in New Zealand, is requiring people buying a house to have a 20 per cent deposit.
The policy, which applies from tomorrow to new loan applications, is a tightening from its previous position of a 10 per cent deposit.
Mortgage brokers said tightening of lending criteria is a trend and other lenders already require a 20 per cent deposit or offer a better interest rate for such loans.
The bank said each customer was treated as an individual and there was no "standard scenario".
But from tomorrow, generally speaking, both its ANZ and National Bank brands will not be offering new lending in excess of 80 per cent loan to value ratio. This means a mortgage cannot be more than 80 per cent of the value of a property.
"In some specific circumstances we may be in a position to lend above 80 per cent but customers will be required to demonstrate an undoubted ability to service the loan in the event of changed financial circumstances," the bank said.
David Tripe, director of Massey University's Centre for Banking Studies, said the move was understandable in a falling property market.
"It is sensibly what one would expect a bank to be doing in the current environment," he said.
ANZ National said the adjustments to its credit policy reflected the increasingly complex financial environment and the continued softening of the property market.
"Other factors are also coming into play, including reduced consumer spending and rising unemployment."
ANZ National said that for all new lending it would be ensuring that both the bank and the customer understood the value of the property in question.
"Where we do lend beyond 80 per cent loan to value ratio, we will require a new registered valuation."
The bank will continue to consider so called "lo-doc" applications but to a maximum of 60 per cent loan to value ratio. These are loans to people with no proof of income like self-employed people.
"We will continue to support our residential investment customers but are unlikely to lend above 80 per cent loan to value ratio," the bank said.
A registered valuation is also likely to be required in certain circumstances for investment properties.
Tripe said the changes were not necessarily a bad thing.
"The 20 per cent deposit will be hard on first home buyers," he said.
He said in recent years banks had been chasing volume growth in home lending at the expense of everything else on the assumption that home lending was essentially risk free.
"We know that it is not and it never was," he said.
The bank says there is no "standard scenario" but in a press statement just issued says:
* Generally speaking, we will not be offering new lending in excess of 80 per cent LVR(loan to value ratio. In some specific circumstances we may be in a position to lend above 80 per cent but customers will be required to demonstrate an undoubted ability to service the loan in the event of changed financial circumstances.
* For all new lending, we will be ensuring that both the bank and the customer understand the value of the property in question. Where we do lend beyond 80 per cent LVR, we will require a new registered valuation.
* We will continue to consider LoDoc (low documentation) but to a maximum of 60 per cent LVR.
* We will continue to support our residential investment customers but are unlikely to lend above 80 per cent LVR. For all new residential investment lending applications, we will seek a registered valuation will be required where the LVR is greater than 75 per cent.
* This comes into effect on Thursday 27 November and applies to all new lending applications. Existing lending arrangements and commitments will not be impacted.
* This applies to ANZ and The National Bank.
- NZPA
