National Australia Bank has identified about 80 postcodes across Australia where it will restrict loan-to-valuation ratios due to concerns about the potential for home loan borrowers to default.
Suburbs in Sydney fell under what the bank has labelled Group B, and were thought to have future deterioration in credit risk.
Areas that ranged from inner-city suburbs such as Glebe and Chippendale to suburbs out west such as Parramatta, Granville and Lakemba were identified in that list.
These were not as bad as Group A suburbs, mainly in Western Australia, Queensland and Tasmania, where significant deterioration in credit risk had been observed.
What does this mean to borrowers?
In Group A suburbs, NAB had introduced a cap of 70% on loan-to-valuation ratios for new lending, which meant buyers would need to save up a 30% deposit.
In Group B suburbs LVR’s will be capped at 80% and borrowers will need at least a 20% deposit.
Fairfax produced this useful interactive graphic outlining the higher risk suburbs:
Source: Fairfax Media