Advisers say it was "not in the spirit of what we think the RBNZ is trying to manage"
Banks have started withdrawing pre-approvals for home loans amid the COVID-19 alert level 4 lockdown as credit condition becomes tighter as usual.
According to Landlords.co.nz, home buyers have been struggling to complete property purchases as banks continue to reject pre-approvals for new home loans. For instance, BNZ refused a customer's loan despite having a loan-to-value ratio (LVR) of less than 75% and confirming that the pandemic did not impact their employment status.
Some ANZ customers also missed their chance to proceed with their settlements as approvals have expired during the lockdown. The bank asked the borrowers for written confirmation that the pandemic did not impact their employment status if they want to extend their pre-approvals. It also asked the customers to verify their income from the current month and confirmation that their deposit was not reduced.
Read more: Coronavirus: Consulting company issues advice to banks
An adviser, who chose to be unnamed, commented that the withdrawal was “not in the spirit of what we think the Reserve Bank of New Zealand (RBNZ) is trying to manage.”
“Lenders realise they have a tiger by the tail in terms of existing business but seem to be closing the shutters wherever they can in terms of new risk, which the RBNZ clearly doesn’t want. Such behaviour is to going to be yet another head wind for the economy,” the adviser told Landlords.co.nz.
