ANZ ‘pauses’ mortgages to people with less than 20% deposits

ANZ has put a temporary hold on issuing new home loans to people with less than 20% deposits.

A spokeswoman for ANZ said the move was to ensure the bank remain within the low-equity lending cap set by the Reserve Bank Te Pūtea Matua, which limits banks to lending only 10% of new home loans to people with less than 20% equity.

Mortgage adviser Karen Tatterson from Loan Market said ANZ was the only bank to announce such a pause, though other banks had done so before.

BNZ went on a temporary low-deposit lending pause earlier this year, and Kiwibank did so last year.

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It’s also not the first time ANZ has announced a low-equity lending pause, having done so in November, though it resumed low-equity lending again in February.

In a message to mortgage advisers, ANZ said the move was so the bank would meet the Reserve Bank’s tightened loan to valuation requirements which cap the amount of low deposit lending to 10% of all new loans to owner occupiers.

Some kinds of loan were exempted from the rules, including people who were borrowing to build a new home, an exemption designed to boost home-building.

Tatterson said banks nowadays tend to use a “traffic light” system to send messages to mortgage advisers when they were making loans to low-deposit borrowers, and when they were not.

ANZ’s pause was the first one in recent times, she said.

Falling house prices have put a dampener on house-buying, having made buyers nervous about negative equity, and buying a home that could quickly be worth less than they paid for it.

Just last week, property research company CoreLogic said house prices fell in half of the country’s suburbs over the last three months, providing proof the market downturn was spreading.

CoreLogic’s latest mapping analysis showed prices dropped by 1% or more in 323 suburbs, and by less than 1% in another 163 suburbs.

A spokeswoman for ANZ said: “Customers with existing approvals are unaffected until the expiry date, at which point we’ll need to apply the updated policy.

“The steps we’re taking are a temporary measure and as soon as we are able we will commence providing approvals for low deposit lending again,” she said.

“ANZ remains open for all other home lending, including lower deposit loans for new builds.”