Westpac NZ will give home loan applicants natural hazard risk reports and may lend less on some at-risk homes, but rules out risk-based pricing.
Westpac NZ has said it may lend less against some properties exposed to flooding or landslips, as it begins sharing natural hazard risk data with home loan applicants.
“We are not moving to risk-based pricing and we don’t expect to be declining applications solely on the basis of this risk,” said Sarah Hearn (pictured), Westpac NZ managing director product, sustainability and marketing.
“However, in a small number of cases, it may mean the amount we’re comfortable lending on an at-risk property is less than it may previously have been.”
The change applies only to new lending. Westpac told The Post that existing borrowers won’t have natural hazard risk assessed when their fixed terms end, and told 1News that around 2% of the properties it lends against are considered very high risk.
Same data the bank uses
Applicants will receive a short Westpac Natural Hazard Risk Insights report based on climate data from New Zealand firm ClimSystems Powered by SLR. It’s the same data Westpac considers when assessing loans.
Hearn said the aim is to give buyers the same information the bank has, so they can decide whether to go ahead with a purchase or how they might protect the property.
“Buying a home is the single biggest financial decision of most people’s lives,” she said.
Buyers want the information
Westpac-commissioned research suggests there is demand. In a survey of 529 people conducted by research platform Ideally in June, 90% of New Zealanders said it was extremely or very important to have information on natural hazard risks to their own home or one they were considering buying.
However, 14% of homeowners and 32% of renters said they weren’t confident about how or where to find it.
Hazard information is already available from local councils, LIM reports, insurers and the Natural Hazards Commission. Since July, Westpac customers applying for home insurance through Westpac One online banking have also been able to see Tower Insurance’s hazard data for the property.
Westpac says it is the only New Zealand bank offering interest-free lending for home resilience improvements. Mortgage customers can use a Greater Choices home loan top-up to fund work such as improving drainage or raising outdoor appliances above potential flood levels.
Regulators have flagged similar responses. The Reserve Bank has said banks are considering restricting top-ups or limiting loan-to-value ratios on high-risk properties, and a government report has warned about 10,000 homes could become hard to insure from 2035.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
