Where NAB expanded its blacklisted 600 suburb list for home loans

National Australia Bank has expanded its list of postcodes across Australia where lending to property buyers will be capped due to potential risks in the housing market.

The loan-to-valuation ratio, or the percentage of a property's purchase price a bank will lend, will be capped at 70 percent in some areas where NAB sees a higher risk, while the other blacklisted ones (called Group B), will see an 80 percent cap. 

The second category includes inner city areas of Australia’s capital cities, according to a recent post on www.domain.com.au citing an article in the Australian Financial Review.

Among the expanded list, NAB has added plenty of Queensland suburbs in the Group A category where buyers will need a 30 percent deposit for a home loan. Some of the new ones in Queensland are Auburn, Mt Pleasant, Fraser Island and Apple Tree Creek.  

Western Australia still has a large list, with two new entrants such as eighty Mile Beach and St George Ranges. South Australia and Northern Territory too have more postcodes blacklisted.

The B list, where buyers will need a 20 per cent deposit, includes inner city suburbs in Brisbane, Sydney, Melbourne, Adelaide and Perth.

The list for Sydney sees a few dropouts from the blacklist category such as Macquarie Park, East and North Ryde (2113), while there are some additions too such as The Ponds (postcode 2769).

Melbourne’s list remains the same such as the CBD, St Kilda’s and Docklands. Brisbane has more suburbs blacklisted in the second group such as Bowen Hills, Fortitude Valley and WOOLLOONGABBA.

“NAB takes into account a range of economic factors, and regularly monitors the performance of local markets to ensure we continue to lend responsibly and sustainably,” the article said citing a bank spokesman. 

“We recognise that no two suburbs are the same, and there are some geographic areas across Australia which have been impacted by local economic conditions. As a responsible lender, we adopt strategies in these geographic areas that seek to reduce the risk to our customers and our business.” 

The bank is still lending to borrowers in the named suburbs.

NAB’s expanded list comes soon after CEO Andrew Thorburn told a parliamentary inquiry into banking that net interest margins are being squeezed at a time when banks are facing higher capital requirements.

Lenders have also responded to pressure from the Reserve Bank of Australia, ASIC and APRA to reduce lending to higher risk investment borrowers, particularly for apartment markets in central Melbourne and Sydney, by cutting back on interest-only loans and increasing deposits to about 40 per cent of the asking price.

NAB, which has about five million customers, has previously warned it has 50 high-risk postcodes.