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Bank moves `largely symbolic': PM

NZ NewswireNZ Newswire 9/06/2016

The decision by two major banks to restrict lending to overseas property buyers won't have much impact on the housing market, the government says.

Westpac announced on Thursday it would no longer lend to non-resident borrowers with overseas income, while ANZ is tightening its criteria.

Opposition parties say its evidence the market is out of control, but Prime Minister John Key sees the moves as "largely symbolic".

"I don't think it will have a dramatic impact," he told reporters in Suva during his visit to Fiji.

"It's got to be a very tiny fraction of their lending."

Mr Key says data released last month showed foreign buyers with no links to New Zealand made up about three per cent of total property sales.

Housing Minister Nick Smith is also playing it down.

"We're satisfied they're a very small proportion of the market," he said.

Labour's finance spokesman, Grant Robertson, says the measures amount to acknowledgement by the banks that there's a housing crisis and the market is seriously overheated.

"It's the goal of a bank to make money from mortgage lending," he said.

"If they are pulling back from lending on New Zealand housing, then there really is a crisis in the market."

Labour has been demanding a ban on house sales to foreign investors, and Mr Robertson says the banks are doing the government's job for it.

"This shows the banks are acknowledging to housing market is out of control and foreign speculators are playing a big role, so they are limiting their exposure if it falls overt."

There are four major banks in New Zealand, all Australian-owned.

The other two, BNZ and ASB, haven't announced any changes.

Mr Key says Westpac and ANZ are following what has happened in Australia.

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