Major bank flags higher-risk postcodes for stricter credit policies

by Julia Corderoy18 Aug 2015
A major bank has flagged 40 postcodes at a higher risk of default on personal or business loans for stricter credit policies.

According to a Fairfax report, NAB chief risk officer David Gall said rising interest rates and unemployment are the two biggest risks for the Australian banking sector. As such, the major bank has identified 40 suburbs most susceptible to changes in rates and unemployment, in order to maintain prudent lending standards.  

“We do have higher-risk postcodes, and we make calls on what we think is the appropriate loan-to-value [LVR] ratio in those higher-risk postcodes,” Gall told Fairfax.

“One of the things that we definitely factor in is where there is actually higher unemployment, or a risk of higher unemployment, given the reliance on single industries for a town or region. We will also look very closely at areas that have had very dramatic increases in property values to consider what is the right ongoing LVR ratio as well.”

Whilst NAB would not disclose what postcodes are on its watch list, Martin North, principal at Digital Finance Analytics, revealed to Fairfax his analysis of those postcodes most at risk if interest rates or unemployment rise. 

According to North, high-risk postcodes in NSW include Blackville, Caroona, Colly Blue, Pine Ridge, Quirindi, Spring Ridge and Wallabadah (2343) in the state's north-west and Greta in the Hunter (2334). 

At risk postcodes in  Sydney include Riverstone (2765), Mount Annan (2567), Auburn (2144), Blaxland (2774), Chipping Norton (2170), Berala (2141) and Bass Hill (2197).
Looking to Melbourne, the postcodes most at risk of default, according to North, are Aberfeldie, Essendon and Essendon West (3040); Gladstone Park, Gowanbrae and Tullamarine (3043); Pascoe Vale (3044); Belgrave and Tecoma (3160); Mount Evelyn (3796); Endeavour Hills (3802); and Berwick and Harkaway (3806).


  • by Damo_A 19/08/2015 12:21:39 PM

    Does anyone know why Belgrave and Tecoma made the list?