Smaller lenders, such as ME Bank, which is owned by superannuation funds, have followed amid concerns they will be flooded by applications from borrowers rejected by their larger competitors.

ME Bank acknowledges it lacks the international networks needed to comprehensively scrutinise overseas applications.

ANZ is believed to have told mortgage brokers that existing approvals from temporary and provisional visa holders will be honoured but no new requests will be approved.

The ban on discretionary pricing means eligible foreign applicants will be offered 5.37 per cent for a variable rate home loan and 5.64 per cent for a residential investment loan.

One-year fixed rates are 4.54 per cent for home loans and 4.94 per cent for residential investment loans.

In addition, eligible foreign borrowers will be excluded three special packages offering lower rates and special equity draw-down features.

Breakfree Package enables borrowers to bundle home and investment loans with everyday banking accounts and credit cards.

Equity Manager is a line of credit account secured by a first registered mortgage over residential property. It enables approved account holders to draw down equity for personal purposes.


Simplicity Plus offers a low variable interest rate for home loans.

"Banks are becoming increasingly worried about the volume of loans to non-residents and the documentation accompanying some of those loans," said Justine Davies, a spokesman for Canstar, which collates data on financial services products.

"There does not seem to be any certainty about whether there are widespread problems, or whether it is confined to just a few," Ms Davies said.

Brokers say the moves are targeting Chinese investors, who in recent years have spent billions of dollars on Australian residential property, particularly in Melbourne and Sydney.