Westpac immediately enforces new lending rules

Westpac will no longer accept new loan applications from property investors who have less than a 40 per cent deposit.

The Reserve Bank yesterday said new lending rules will coming into play from September 1.

While all banks signalled they would comply with the rules, Westpac said from this afternoon it will not take new loan applications from property investors who don't have a 40 per cent deposit.

"Westpac has already signalled it will work in the spirit of the new regulation. To do so, and given the period allowed for adjustment, we will not take new loan applications, beyond the revised 60% LVR restriction, from property investors from 4.30pm today. Those with pre-approvals will still be assessed as per the usual process." the bank said.

New rules - to begin September 1:

Investors

• Restrictions for investor lending extended from nationwide from Auckland only
• Banks will be forced to require a 40 per cent deposit - up from 30 per cent - for at least 95 per cent of the loans they make in this area.

Home buyers

• Restrictions for owner-occupier lending extended from Auckland to nationwide.
• Required deposit level remains at 20 per cent for at least 90 per cent of bank lending.

Exemptions

The exemption allowed under the current LVR policy will continue to operate, including for construction lending and major non-routine repairs of dwellings.

The move to target investors was welcomed by Prime Minister John Key, as well as Labour and the Green Party.