Banks restrict lending to overseas buyers wanting New Zealand homes

Two of New Zealand's four main commercial banks are restricting lending to offshore buyers who want to purchase investment homes, it emerged Thursday.

Westpac and ANZ - both subsidiaries of Australian banks - have announced tighter rules on lending to housing investors as New Zealand struggles to deal with a housing crisis.

Opposition lawmakers welcomed the move, saying the banks were recognizing that soaring home prices were being driven in part by investors from home and abroad.

"Westpac has today announced it will no longer lend to non-resident borrowers with overseas income to reduce risk. And last week ANZ announced tightening of lending to investors," said Grant Robertson, finance spokesperson for the main opposition Labor Party.

"This shows the banks are acknowledging the housing market is out of control and foreign speculators are playing a big role so they are limiting their exposure if it falls over," Robertson said in a statement.

"It's the goal of a bank to make money from mortgage lending. If they are pulling back from lending on New Zealand housing, then there really is a crisis in the market," he said.

Westpac, and other major banks, reportedly made similar moves in Australia in April.

Housing Minister Nick Smith told Radio New Zealand he was not worried about the moves, saying banks were entitled to make their own decisions and the government did not tell them who they should loan money to.

"They should make the decisions based on their obligations they owe to their deposit holders to ensure that they are wisely managing that money," said Smith.

Earlier Thursday, the Reserve Bank of New Zealand said it was holding its official cash rate at 2.25 percent, repeating its warning that house price inflation in the largest city of Auckland - home to a third of the population - and other regions was adding to financial stability concerns. Endit