Mortgage brokers are in no way shocked by tighter credit controls on certain suburbs announced by one major bank this week, which they expect will continue into 2017 and beyond.
Media reports over the weekend revealed that NAB had compiled a “blacklist” of more than 100 postcodes across the country where buyers will need to pay as much as a 30 per cent deposit to secure a mortgage.
Suburbs in Western Australia copped the worst of the lending curbs as the major bank looks to reduce its exposure to regional areas where residential property values have been hit hard by the mining downturn.
Perth-based broker Bianca Patterson of Calculated Lending, who was crowned Broker of the Year at the 2014 Better Business Awards, said the postcode blacklist is a hot topic among mortgage professionals in Western Australia right now.
“It’s not the first time it has happened and it won’t be the last,” Ms Patterson said.
“A lot of the postcodes that have been restricted in WA are in country or rural areas and areas that banks consider higher risk with mining slowing down. They are areas that are quite oversupplied with housing now.”
The award-winning broker told The Adviser that she is not concerned about NAB’s announcement, but feels disappointed for those who own properties in areas where the bank has capped LVRs at 70 per cent.
“It will have a direct effect on those investors. My advice to investors buying in areas that are quite speculative is that this is one of the risks. With properties that offer greater returns there are greater risks,” she said. “[NAB’s announcement] was to be expected.”
Meanwhile, Melbourne-based broker Chris Foster-Ramsay told The Adviser that he expects tighter lending conditions to continue during 2017 and 2018.
A number of Australian banks began targeting certain postcodes back in July following fears of an oversupply of apartments. For example, Citi compiled a list of nearly 260 suburbs (80 postcodes) where it had reduced LVRs from 80 per cent to 70 per cent on high density units.
ING DIRECT and AMP Bank also introduced similar measures earlier in the year.