Westpac has told mortgage advisers that it will no longer accept applications for home loans where the deposit is 20% or lower.
The move comes after the bank had been on the market telling mortgage advisers it was still doing loans over 80%.
Westpac said it needed to stop accepting new applications for loans over 80% to make sure it remained within the Reserve Bank's requirement that no more than 10% of loans written are n the low equity category.
“All exemptions will remain and applications which meet these exemption criteria will be considered. Approvals which are currently in place will continue to be honoured,” it said.
“This is a temporary measure for which we appreciate your understanding and support; we will update you with any changes.”
A Westpac spokeswoman said it was likely to be only a short period before it could accept applications for loans over 80% again.
It is unclear whether the bank is still doing low equity loans through its branch network.
Meanwhile, ANZ has done an about turn and loosened lending criteria around construction loans.
When the Reserve Bank announced its latest restrictions in June, ANZ moved to implement them immediately, although the official start date was October 1.
"As the New Zealand economic environment continues to evolve, our lending appetite continues to change to ensure we are balancing our risks," the bank says in an email to advisers.
It has decided to re-instate residential investment lending for construction and to re-instate turnkey.
It also notes the Reserve Bank has introduced a new definition for turnkey. A property now also meets the existing Turnkey exemption if settlement happens up to six months after the Code Compliance Certificate is issued; the dwelling must be purchased from the original developer and this is applied to both Owner Occupied and residential investment lending.
ANZ residential investment lending for construction
- Allows the purchase of bare land in new sub-divisions, with building to commence within 12 months.
- Reintroduces the RIL construction exemption, i.e. up to 85%.
- Fixed priced contracts only.
- Builders that meet residential development rules, remain at a maximum 60%.
- Not available for relocations, customers employing a builder and manages the contract themselves.