ASB yesterday confirmed it was cancelling existing preapprovals unless borrowers used them by next week.
It said the move was necessary if it was to comply with the new loan-to-value speed limits, introduced from October 1. Banks will have to keep their new lending to borrowers with less than 20% deposit to no more than 10% of their total loans.
English said the bank had months to prepare.
ASB had been lending a greater proportion of low-deposit loans than the other banks and English said it seemed the bank had not been listening to messages from the Reserve Bank.
"Six months ago the Reserve Bank Governor was talking about bringing restrictions on low deposit loans and this seems to be the only bank that's got themselves in a position where they're letting down people who they gave approvals to."
So far, no other bank has indicated it will need to follow ASB's example.
ASB wants affected customers to get in touch. They will need to reapply for loans and the bank said some would need to reassess their deposits or the value of the houses they were buying.
English acknowledged that the LVR restrictions were causing some short-term pain to first-home buyers but he said they would benefit over the longer term.
