ANZ reintroduces low-deposit lending

But it comes with a $2,500 hitch

ANZ reintroduces low-deposit lending

ANZ NZ has reintroduced low-deposit home loan approvals, but there’s a big catch – borrowers must have $2,500 in spare income a month.

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In November, ANZ NZ put a hold on lending to home loan borrowers with deposits of less than 20%.

ANZ said that “effective immediately, we’ve reintroduced approvals for over 80% LVR lending that meet the criteria” – that criteria including being a main bank customer of ANZ and having a minimum uncommitted monthly income (UMI) of $2,500, NZ Herald reported.

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It is also only available on approvals and not preapprovals.

Karen Tatterson, a mortgage broker with Loan Market, said ANZ used to have a UMI before, which was just around $1,000.

“So it is quite a big jump and it is going to be a big call,” Tatterson told the publication. “It is only people on really good incomes who are going to be able to qualify, who have no discretionary spending.”

Tatterson said the income required to meet that UMI would depend on how much they were borrowing.

“It wouldn’t be a couple of people on a basic income,” Tatterson told NZ Herald. “You would have to be semi-professional, have to obviously have no debt, so the minute you start talking about student loans, credit card limits, and car loans that is going to pull the UMI down. And the other key thing is they are going to have to be very tight around their discretionary spending. That is what throws people out, it is not the calculations, it is their discretionary spending which we have never had to detail in the past. Generally, those people on higher incomes tend to have a higher level of discretionary spending.”

That spending is under the spotlight due to stricter lending laws which came into effect on Dec. 1. An inquiry into the impact of the regulations had been launched following pressure from mortgage brokers and the public.

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With ANZ the first of the big four banks to offer low-deposit lending since they all withdrew it late last year, Tatterson expects the other three to follow eventually.

“It’s all about them making sure they are meeting their requirements under the Reserve Bank restrictions,” Tatterson told NZ Herald.