AMP 'blacklists' more than 140 suburbs for apartment lending

by Julia Corderoy24 Mar 2016
More than 140 suburbs have been blacklisted for apartment loans by a non-major lender following fears of oversupply, off-the-plan sales and falling prices.

According to leaked documents obtained by the Australian Financial Review, AMP explains its ‘black list’ is a “prudent” response to managing risks of oversupply, which could push down prices, rents and lead to defaults.

The ‘black list’ is primarily concerned with apartment developments consisting of more than 10 dwellings built near capital cities and inner-suburban areas, where there is a high volume of new or soon-to-be-completed developments.

Even suburbs more than 10-kilometres from Sydney’s CBD, such as Homebush and Arncliffe, have recently been added to AMP’s list as more and more apartments are beginning to be constructed in those areas.

According to the leaked documents obtained by the AFR, AMP borrowers will face tougher terms on the amount borrowed, the number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees.

An AMP spokesperson has confirmed the ‘black list’ is indeed about maintaining prudent lending standards, and will be assessed on an on-going basis. 

AMP Bank takes a prudent approach to managing risk.  We take into account a range of factors with our lending policies, including using data provided by industry participants to assess trends and information on postcodes,” the spokesperson told Australian Broker’s sister publication, Your Investment Property.

“We have identified certain high density living areas where we have put provisions in place to manage risk around over supply. These provisions are regularly monitored and assessed on an ongoing basis.”

The AFR has reported that AMP is one of many big lenders circulating ‘black lists’ of suburbs where apartment buyers will face tougher application and serviceability requirements.