By Pam Graham of NZPA

Wellington, Nov 26 NZPA - ANZ National, the largest bank in New Zealand, is requiring people buying a house to have a 20 percent deposit.

The policy, which applies from tomorrow to new loan applications, is a tightening from its previous position of a 10 percent deposit.

Mortgage brokers said tightening of lending criteria is a trend and other lenders already require a 20 percent deposit or offer a better interest rate for such loans.

The bank said each customer was treated as an individual and there was no "standard scenario".

But from tomorrow, generally speaking, both its ANZ and National Bank brands will not be offering new lending in excess of 80 percent loan to value ratio. This means a mortgage cannot be more than 80 percent of the value of a property.

"In some specific circumstances we may be in a position to lend above 80 percent but customers will be required to demonstrate an undoubted ability to service the loan in the event of changed financial circumstances," the bank said. David Tripe, director of Massey University's Centre for Banking Studies, said the move was understandable in a falling property market.

"It is sensibly what one would expect a bank to be doing in the current environment," he said.

ANZ National said the adjustments to its credit policy reflected 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 that for all new lending it would be ensuring that both the bank and the customer understood the value of the property in question.

"Where we do lend beyond 80 percent loan to value ratio, we will require a new registered valuation."

The bank will continue to consider so called "lo-doc" applications but to a maximum of 60 percent loan to value ratio. These are loans to people with no proof of income like self-employed people.

"We will continue to support our residential investment customers but are unlikely to lend above 80 percent loan to value ratio," the bank said.

A registered valuation is also likely to be required in certain circumstances for investment properties.

Mr Tripe said the changes were not necessarily a bad thing.

"The 20 percent deposit will be hard on first home buyers," he said.

He said in recent years banks had been chasing volume growth in home lending at the expense of everything else on the assumption that home lending was essentially risk free.

"We know that it is not and it never was," he said.

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