ING Australia shuts door to expat buyers
ING Australia has admitted that it is stopping lending to expatriate Australians needing finance to buy property in their home country.
It is the second major international bank to cut credit to Australian borrowers in a week.
The Dutch bank, a division of the global financial giant, has, according to local reports, said that it will announce that from Monday none of the estimated one million Australians living overseas will be “considered eligible borrowers”, despite demand from wealthy expatriates.
It follows a decision by the Australian division of Citibank, to stop residential property lending as fears about a housing slowdown in the region begin to have an impact on investors.
ING, which does not lend to foreign property buyers, is believed to have quit the market because of the expense and complexity of verifying the source of borrowers’ incomes, according to a report in Australian financial website Financial Review.
The bank would not comment on the matter but confirmed it is happening. ING loan applications received prior to Monday will still be assessed under the current guidelines.
The Australian federal government has recently introduced tougher regulations and penalties for lenders that breach lending regulations due to a rise of money laundering allegations.
1m Aussie expats
There are more than a million Australians living overseas, with Citi and ING are both major global banks with big footprints across the Asia-Pacific
Local mortgage brokers and buyers’ agents claim there is strong demand from expat buyers, particularly for prestigious properties in Melbourne and Sydney.
Emma Bloom, a director of Morrell and Koren, a buyers’ agent, told Financial Review said: “There are a lot of expats coming home – or preparing to come home – that are being encouraged by the low dollar to buy.”
The $5 million-plus market is strong but tighter domestic bank lending for the $3 million to $5 million is slowing sales, she said.
Citibank added that it is cutting drawdown lines of credit on home equity and increasing interest rates as it tightens lending criteria on both new and existing borrowers.
A spokesman said it follows a “regular review” of interest rates and makes changes “as market and economic conditions change”.