National Australia Bank, which last week raised rates for local home owners and investors in an out-of-cycle hike, is turning the screws on local and offshore property buyers by tightening lending criteria and increasing rates.
The bank is imposing tight eligibility rules around the first new home buyers' special two-year fixed rate of 3.69 per cent for owner-occupied, principal and interest-only loans.
For example, a limit of 50 per cent is being imposed on government parenting benefits and family tax allowances on the gross income source of an applicant, the bank is advising mortgage brokers. Most lenders accept 100 per cent of benefits when calculating income, according to Mortgage Choice, a listed brokerage.
It is also stressing to brokers to "discuss their customer's situation" and warning that all requests for the special offer will be independently verified with incorrect applications facing invalidation.
"If any information provided is incorrect, or there is a change prior to settlement, the pricing approval may be invalid and a new approval may need to be obtained," the bank warns.
The new cheap rate is not available for customers who currently have, or previously purchased a product. Product swaps are also ruled out and a maximum 90 per cent loan to value ratio applies.
"NAB continues to adjust its home lending policies as part of our ongoing commitment to responsible lending, to ensure that customers can repay their mortgage both today, and in the future," a spokesman said.
" As part of this, we now require that government parenting payments and Family Tax Allowances (in total) must not represent the predominant income source of a home loan application. We consider this prudent given these payments are not ongoing and will discontinue once a child reaches a certain age."
NAB has also raised rates for local home owners and investors in an out-of-cycle rate hike. Its standard variable rate for owner-occupiers was raised to 5.25 per cent to 5.35, while the rate for residential investment loan customers rose from 5.55 per cent to 5.8 per cent.
From April 19, the bank will increase variable rates on offshore loans because of increased risk and higher costs of dealing with them.
The bank is not specifying how much the rates are rising by, or the number of house buyers it will impact. It has also not explained how it will deal with nominee accounts through which many of the properties were purchased.
The new rates will apply to existing loans.
An overseas' borrower is defined as anyone who is a non-resident for tax purposes and where all borrowers have not lodged their tax file with the bank.
Last year, NAB closed the door to foreign buyers that did not have existing Australian income.
