Luxury homes along Sydney Harbour.
Singaporeans planning to buy homes in Australia may find it difficult to secure a loan, given the tighter lending rules recently imposed by major Australian banks to non-residents, reported The Straits Times.
The Commonwealth Bank, for instance, will no longer approve applications that indicate self-employed foreign currency income.
Applications by temporary Australian residents with foreign-currency income will also be rejected by the bank, while temporary Australian residents with Australian-dollar incomes can only borrow up to 70 percent of the property’s value, down from 80 percent previously.
The National Australia Bank (NAB) has slashed the maximum loan-to-value ratio to 60 percent from 80 percent for non-resident home loan applicants. The lender will also take a discount, or a “shading”, of up to 40 percent on the applicant’s income when assessing the ability of the borrower to service the loan.
Westpac, on the other hand, plans to stop offering home loans to temporary visa-holders, those with foreign self-employed income and non-residents. The bank said it can offer Australian property loans to “nationals and residents of Singapore” through its branches here.
Analysts, however, warned investors that loans originating from the city-state will be subject to the Total Debt Servicing Ratio (TDSR) framework.
Despite the tighter lending criteria, property agents and mortgage brokers believe that Singapore investors will not be badly affected.
“Singaporeans, in general, are still viewed rather favourably as they are able to produce income or bank statements from reliable sources,” noted Anson Tay, PropNex International’s Head of International Markets.
With Singaporean investors accounting for a big portion of its clientele, Australian mortgage advisor David and Partners said there are still ways to secure home financing.
“We have 20 lenders in Australia on our panel, and they are still lending… Probably the biggest change is not so much that they are not lending, it is the additional documentation required for loans,” said its Managing Director, David Moss.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
