NAB puts 40 postcodes on credit watchlist

Interesting that NAB listed 40 post code on watchlist as obviously they must have observed some issues on those suburbs:

http://www.smh.com.au/business/bank...odes-on-credit-watchlist-20150817-gj12o3.html


"Mr North said postcodes in NSW that banks would be wary about 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). "The slowing of new resources projects in the Hunter is a driver," he said. He also pointed to Riverstone (2765), Mount Annan (2567), Auburn (2144), Blaxland (2774), Chipping Norton (2170), Berala (2141) and Bass Hill (2197) as being the highest risk suburbs for defaults in Sydney.

In Melbourne, the postcodes most at risk of default 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). "

 

Ha, in the article NAB doesn't say what postcodes are on the list so they then use some other model! So the suburbs listed isn't "the list".

Still, an interesting move. Banks would easily be able to see total loans in each postcode, defaults and decreased income flows (miner moving to construction and taking $50K pay cut). I wonder of they're also seeing a rise in personal loans when people roll their three overdue credit cards into one loan?

Prudent measure or more small stones rolling down the mountainside ahead of the avalanche?

 

Would you believe that NAB has had Carlton (VIC) as one of their high risk postcodes for years now? Not recently as a result of any particular boom/bust cycle. If you need to borrow more than 70%, prepare to pay LMI.

 

Hmm a couple of Logan post codes in Brisbane i see - maybe they know something we don't?

No Adelaide post codes listed

 

A friend of mine has been applying for credit for a principle place of residence in Adelaide and he said it was interesting to see that some lenders gave a flat 'no' for some postcodes... U-Bank was one that he mentioned.

 

Amazing, 2770 is not on the list! Or is it still early days?

 

Plenty of lenders have postcode restrictions, they always have. Some areas are simply deemed higher risk and they don't want to be there at all. You'll find online lenders especially shy about anything but locations they consider category 1. Other lenders have varying levels of restrictions.

As an example Adelaide Bank won't fund in the Melbourne CBD at all, at any LVR.

During the mining boom quite a few lenders started blacklisting towns that were primarily dependent on the mining industry.

The CBA has a policy saying they'll lend to any postcode in the country. Despite this they still classify their postcodes and if you're buying something in a category 4 location, you'd better have a very, very strong application to make it through their credit scoring.

This article is barely newsworthy. It's nothing new.

 

Why would Carlton be on this list? (Not being Melbournian, I can't read between the lines. Is it newly trendy or ...??)

 

Carlton is on the CBD fringe, bordering Melbourne Uni. Fantastic location if you like living close to the CBD. It's one of Melbourne's oldest suburbs, house prices consistently increase in value.

I have no idea why the NAB don't like it.

 

Concentration risk is also taken into consideration. At certain times individual branches/lenders outperform the market and one bank can end up with a considerable % of the mortgage market in an individual location.

This is usually more prevalent in non-city towns where a branch manager can have a high impact on the performance of the bank in the local area.

It is however, a consideration to the banks post-code policies.

Blacky

 

Maybe a little like the North Shore in Sydney? A lot of façade going on ....??

 

Nah, north shore doesn’t have that ethnic base - getting more Asian by the day pushing out the blue rinse set.

 

Too many student apartments?

 

That's not the problem and most lenders have restrictions on student apartments regardless of postcode.

Carlton is one of Melbourne's older suburbs. Lots of terrace houses. Some renovated and very modern, some not. I'd describe it as a 'Blue Chip' suburb.

 

So what is NAB's financial intelligence on Carlton - they must actually have a reason why they don't like it.

It's a rhetorical question by the way, I don't expect you personally to know !

 

I don't understand how Blaxland could make the list

 

Probably because of this guy:
https://propertychat.com.au/community/threads/sydneys-wedding-of-the-year.2935/

 

I saw that about the Auburn deputy major. Something is rank in the state of Denmark... erm.. I mean Auburn.

 

Whilst I know the suburbs mentioned in the article are not necessarily on the NAB list, I'm surprised about some of the inclusions, particularly Essendon and Pascoe Vale. Is it solely due to the rapid increase in house prices in the last 12 months?

 

I don't get how that can be going on in local government in this day and age. Something odd.