Banks start loosening mortgage restrictions

Some relaxation seems to be under way to the tougher home lending criteria banks introduced as the world was gripped by financial crisis last year.

Westpac has started advertising for home buyers with a deposit of less than 20 per cent, and mortgage brokers have reported other banks lending at more than 80 per cent of the value of the property.

Mike Pero Mortgages chief executive Shaun Riley said Westpac had been selectively lending up to 90 per cent of a property's value, The Press reported.

Banks were more willing to work with brokers to negotiate deals. Instead of declining an application straight away, banks were asking for extra security or a guarantor.

Westpac spokesman Craig Dowling said a combination of lower rates, funding being more accessible and vendors being more realistic on prices meant there were more opportunities for buyers.

He would not say how low Westpac would be prepared to go, but a 10 per cent deposit was within lending bounds. The bank would probably not provide 100 per cent mortgages.

Christchurch mortgage broker David Tillman said he had noticed banks beginning to ease their lending policies in the past two weeks.

ANZ National spokeswoman Virginia Stracey-Clitherow said it generally did not offer new lending in excess of 80 per cent, and it had no plans to change the policy.

ASB retail banking chief executive Ian Park said it still had a policy of obtaining a 20 per cent deposit, and he believed it was inappropriate to review that in the current market.

BNZ said it was continuing to provide home loans to customers with less than a 20 per cent deposit, but every application was treated on its merits.

Kiwibank acting chief executive Paul Brock said it had always lent to people with less than 20 per cent deposit, but some of its special interest rates were not available to those borrowers.

- NZPA