The major bank was the first of the big four to curb mortgage lending to non-residents, announcing late in March that it would no longer accept applications for loans based on 100 per cent foreign income.
CBA and Westpac have since announced similar measures.
Mr Elliott told Mortgage Business that the decision was driven by the difficulties in doing income verification checks for non-residents.
“It is quite complicated verifying somebody’s income when you’re looking at foreign language documents and in jurisdictions that don’t necessarily have the same paperwork and backups that we do here,” Mr Elliott said.
He added that there had been increasing uncertainty across the industry around “the validity of some of those documents”.
“Broadly across the industry, people have made the decisions to step back from that segment for now until we strengthen our process and understanding of how best to service that customer base,” Mr Elliott said.
“I don’t know that that step back will be permanent. It may just be a step back until we reassess it.”
Westpac was the latest lender to announce changes to its non-resident lending, announcing last week that it would no longer accept mortgage applications from foreigners.
In addition, LVRs for acceptable domestic applications with foreign income was reduced from 80 per cent to 70 per cent.
Commenting on the policy changes, Donald Tang of Sydney-based brokerage Alliance Mortgage Solutions said Westpac’s decision was “quite a big change for the industry”.
“We have heard people talking about this change from about a month ago but didn’t realise it would come through so quickly,” Mr Tang told Mortgage Business.
“I think Westpac does have their multiple reasons for this policy change so we have no other choice but to accept it.
“This will affect our business for sure but I think we will be fine by taking clients to other lenders whose policies still cater for foreign income buyers.”
Mr Tang said less than 25 per cent of his business came from foreign buyers and it was “too early to say” whether the policy changes would hurt Chinese demand for local real estate.