This follows similar moves from ASB and ANZ
Westpac has announced that it won’t be offering pre-approvals for those with low deposits.
The move comes after ASB and ANZ confirmed earlier this week that they had temporarily put on hold the issuance of home loans for those with deposits under 20%.
Read more: ASB closes doors to low deposit mortgage customers for now
Westpac said it “will be limiting the availability of new home loan pre-approvals for customers with less than a 20% deposit, to ensure we stay within the RBNZ LVR limits,” interest.co.nz reported.
The moves by ANZ, Westpac, and ASB come at a time when house prices have already declined by about 6% from their peak last November – and are expected to fall further, while mortgage rates continue to increase, with most rates now above 5%.
Read next: ANZ "pauses" low-equity lending
Existing pre-approvals and applications that have already been received by the bank will not be affected by the changes, a Westpac spokesperson said.
“Additionally, new applications for existing Westpac customers seeking high-LVR lending will still be eligible for lending if they present a signed sales and purchase agreement when applying for finance,” she told interest.co.nz. “This means these applicants will not be able to buy unconditionally, i.e., at auction, based on a pre-approval.”
The spokesperson said there are other options available for first-home buyers with less than a 20% deposit. This includes the Westpac Family Springboard, Kāinga Ora First Home Loans, and Kāinga Ora First Home Partner. Loans for new builds are also exempt from high LVR restrictions.
BNZ and Kiwibank continue to offer loans for those with deposits less than 20%, interest.co.nz reported.
