NAB demands higher deposits for mortgages in Childers
THE National Australia Bank has identified Childers as an area where there may be a rising risk in the mortgage market, forcing its customers to provide a higher deposit to secure a home loan.
In a surprise move last week, NAB expanded its restricted postcode list to include Childers and Deepwater, between Baffle Creek and Agnes Water, where it will only lend to people buying a home if they put down a 30% deposit.
NAB has two postcode risk lists: group A where it limits lending to 70% loan to value ratio and group B, where the bank lends a maximum of 80% LVR.
With loans limited to 70% of the property value in Childers, a $90,000 deposit would be needed for a $300,000 mortgage.
It's a blow to the region's NAB customers but a spokeswoman for the bank told the NewsMail it was being a "responsible lender”.
"We adopt strategies in these geographic areas that seek to reduce the risk to our customers and our business,” the spokeswoman said.
"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.
"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.”
Aussie Bundaberg mortgage broker George Farmer said while it was not a good look it wasn't indicative of low confidence in the Childers market.
'All banks do a risk review process and for one reason or another NAB are feeling that Childers is a higher risk area to lend money in,” he said.
"From a consumer perspective it's a reminder that it pays to shop around.
"Do we have lenders that will lend to 95% in Childers? We absolutely do.”
Homeloan Experts says NAB made the right decision.
"The last thing Australia want is to have economic chaos casused by our major banks taking larger risks,” a spokesman said.
"By limiting your borrowing in these locations, the bank may prevent you from ending up in a situation where you have negative equity if there is a fall in the market.”