Major bank slashes LVRs in high risk areas

by Julia Corderoy29 Sep 2015
National Australia Bank (NAB) has identified a list of 33 postcodes that have experienced “significant deterioration in credit risk”, whereby the major bank will drop the maximum LVR below 80%.

In a note to mortgage brokers obtained by Fairfax, the lender flagged 40 suburbs nationally as “Group A restricted postcodes”, where the credit risk is so high the major bank has dropped the LVR to 70%. Mining towns in Western Australia and Queensland dominate the list, where 22 Western Australian postcodes and 11 Queensland postcodes were identified. The remaining highest-risk seven postcodes are in South Australia, Northern Territory and Tasmania.

Suburbs identifed in Western Australia include Bannister, Collgardie, Menzies, Leonora and Newman. Queensland suburbs include Blackwater, Gladstone, Guanaba and the Mackay Region. 

NAB also identified 43 “Group B” postcodes it says include areas which are “exhibiting characteristics which may indicate future deterioration in credit risk”. These postcodes will be subject to a maximum LVR of 80%. This second group is dominated by New South Wales, where 34 Sydney postcodes were flagged as risky. Only five Melbourne postcodes were listed. 

At risk Sydney suburbs include the Sydney CBD, North Ryde, Chatswood, Chippendale, Baulkham Hills and Hurstville. Melbourne suburbs include the Melbourne CBD, St Kilda, Docklands and South Bank. 

“We recognise that in any property market, no two suburbs are the same and these strategies take into account a range of economic factors and provide an extra level of caution to our risk settings,” a NAB spokesperson said, according to Fairfax.

This list comes after NAB flagged 40 postcodes at a higher risk of default in August, however, the major bank did not disclose what postcodes which were on its watch list.