Two of New Zealand's biggest banks have imposed new restrictions on overseas property buyers.

In a statement, Westpac said it would no longer lend to non-resident borrowers with overseas income, while the maximum allowed loan to value ratio for New Zealand citizens and permanent residents with overseas income would be reduced to 70 per cent from 85 per cent.

Borrowers who are on temporary residence visas will only be accepted if they have both a New Zealand address and a New Zealand income.

Westpac said the changes were imposed as part of an "ongoing review of lending criteria in a fast moving market". It added that verification of foreign applications was essential to meet its lending criteria "but is operationally difficult in these cases".

The changes are effective immediately.

ANZ is also overhauling its home loan policies for applications that rely on overseas income. A maximum loan to value ratio of 70 per cent is applied and will not be lent on investment properties. No interest only mortgages will be issued and boarder income won't be taken on board.

The changes won't affect a New Zealand citizen living abroad who is buying a home in New Zealand.

A spokesman said the changes were being made to "ensure that ANZ is appropriately positioned in the current housing environment, taking into account supply pressure in certain areas. We remain committed to helping customers into their homes and will continue to assist buyers with their plans for home ownership."

A spokeswoman for BNZ said that "it's a situation we're constantly reviewing, but we have nothing to announce".

Labour's finance spokesman Grant Robertson said banks were acting while the government had its head in the sand: "This shows the banks are acknowledging the housing market is out of control and foreign speculators are playing a big role, so they are limiting their exposure if it falls over".