The National Australia Bank is the last of the big four banks to restrict home loans for foreign residents.

NAB is not going as far as its competitors, but will reduce the maximum loan-to-valuation ratio for lending to non-citizens and permanent residents to 60% from 70%.

The bank will also reduce the amount of 'foreign source' income allowed to 60% from 80%, and will discount foreign income by 40% when assessing income to cover home loans.

NAB has asked mortgage brokers to undertake additional income verification, and will no longer accept loans from self-employed foreigners.

The tighter lending arrangements across the banking sector have come amid concerns about fraud and money laundering, and have raised concerns about the apartment market, where a large number of buyers are from offshore.

See also:

Westpac closes the door on foreign property buyers.

Withholding tax for foreigners adds to red tape.

Property council urges NSW not to increase stamp duty, land tax for foreigners.

Foreign buyer policies taking a toll, but not in Brisbane. (new)