Have your say: ANZ National tightens home lending rules

Interest rates may be falling, but credit to buy houses is no longer easy to get. New Zealand's largest banking group, ANZ National, has announced a tightening of its lending criteria for home loans, citing "the increasingly complex financial environment and the continued softening of the property market." "Other factors are also coming into play, including reduced consumer spending and rising unemployment," ANZ National said. ANZ National is not the first to tighten its criteria. ASB's Sovereign Home Loans announced a similar tightening in September and since then GE Home Loans has pulled out of the wholesale market. Westpac tightened its home lending rules in May. This is all part of the implosion in global debt issuance spreading to New Zealand. The latest Reserve Bank Financial Stability Report showed that New Zealand bank net foreign liabilities have risen NZ$70 billion in the last 5 years and our banks now owe NZ$127 billion to foreign banks, including NZ$81 billion due within a year. That funding has dried up in recent months and now the Reserve Bank is providing it directly, having lent the banks NZ$3.45 billion in the last three weeks through its new Term Auction Facility that takes Residential Mortgage Backed Securities as collateral. ANZ National is effectively rationing scarce credit through qualitative means as well as price. ANZ National said it would still lend more than 80% of a property's value in exceptional circumstances, but only when a customer can clearly afford it and a new registered valuation is available. ANZ National said, generally, it would not be offering new loans over 80% loan to value ratio (LVR) and would restrict low documentation loans to 60% LVR. It would also restrict residential investment loans to 75% LVR. What's your thoughts? Should ANZ National have done this earlier and should the others follow? I suspect many are already running informal policies that are very similar. What might this do to house prices? I still think we're on track for a 30% fall in house prices.