In a shock move for many home hunters, ASB Bank is withdrawing all its loan pre-approvals for buyers with deposits of less than 20%.
It says the decision was prompted by the Reserve Bank's new restriction on how much banks can lend from next month.
From 1 October, banks will be allowed to have only 10% of new lending tied up with low deposit home loans as the bank tries to cool the housing market. ASB's rules will come into effect on 4 October.
ASB Bank is apologising to customers, saying the decision will disappoint those who have a pre-approved home loan offer with a loan-to-value ratio of 80% or higher.
The bank has not said how many pre-approved loans and people are affected but is apologising for any inconvenience the move has caused.
It says it's encouraging affected customers to contact it to see if it can help with a new pre-approved loan with different deposit or property value criteria.
The ANZ, BNZ and the Co-operative Bank say they will continue to honour existing mortgage pre-approval commitments. Westpac says it is monitoring the situation and will do what is required to comply with the Reserve Bank rules.
Talk to bank promptly - broker
ASB told mortgage brokers on Monday morning about its move.
The head of the Prosper group of mortgage brokers in the upper North Island, Geoff Bawden, says it's not clear how many customers would be affected.
But he says any home buyers with a home loan pre-approval need to go back to their bank quickly and make sure that approval still stands.
'Unprecedented', says analyst
A senior lecturer in banking at Massey University, Claire Matthews, says the ASB's decision is unprecedented but so are the Reserve Bank rules that have prompted it.
She says those affected need to go back and talk to the bank.
"They may be able to get another pre-approval for a slightly smaller amount or under slightly different conditions but if they can't get that from ASB, then the option is to go to the other banks and see if they can help."
