Aussie lender adds hurdle to foreign property buyers

Foreign buyers of Australian real estate are going to need more savings after the National Australia Bank became the last of the majors to implement restrictions.

As of this weekend, the National Australia Bank (NAB) will limit the maximum amount it will lend non-Australian citizens and permanent residents to 60 percent of the asset's value and will also shade, or discount foreign income by 40 percent when assessing the loans serviceability, the bank said on Thursday.

NAB's moves is the last of Australia's "big four" to have imposed restrictions on foreign buyers of Australian real estate after internal reviews in Westpac bank and Australia and New Zealand Banking Group (ANZ) found hundreds of approved mortgages were based off fraudulent documents relating to foreign income. The Commonwealth Bank of Australia has never been a big lender to offshore buyers.

Changes to mortgage lending practices are potentially putting property purchases in doubt, Australian mortgage brokers are warning, just as the number of new apartments due to be settled over the next two years hits record highs.

Figures from market analysts CoreLogic RP show the volume of new apartments in Australia is fast approaching, and even exceeding sales over the past five years, creating a"big disconnect"in the market, researcher Cameron Kusher said. Endit