140 Suburbs Blacklisted By AMP
A leaked document from AMP suggests that that there are no go zones in terms of lending due to concerns of an oversupply in certain areas, but it appears they are not the only lenders with these concerns.
According to reports in the AFR, AMP Bank suggest they are being prudent regarding some of the areas they have listed. Prudent in banking terms means that there is a level of concern with the number of apartments being built in the CBD of capital cities.
There is an estimated 44,784 apartments due for completion and settlement this calendar year across Sydney, Melbourne and Brisbane, up almost a quarter on last year's 36,486
It is not just AMP that is concerned with a potential oversupply of apartments. ANZ Bank also announced last week the areas where Lenders Mortgage Insurance (LMI) would not be available. The 50 postcodes that were not acceptable for LMI were predominantly in Western Australian, Queensland and NSW mining towns.
Last October NAB listed more than 80 "restricted postcodes" across the country where it is capping the percentage of a property's purchase price it will lend, known as a loan-to-valuation ratio.
In Sydney, concerns around potential oversupply are in the CBD, Darling Harbour and Millers Point.
Sydney has been the nation’s top performing residential property market, posting rises of nearly 10 per cent for apartments and 5.5 per cent for rents during the past 12 months, according to SQM.
Lenders are also concerned that off-the-plan investors may not have the capacity to bridge the gap between the deposit and lower loan-to-value ratios, which means bigger deposits before settlement. Another concern would be if the valuation comes in less than the purchase which would mean having to put in additional funds towards the purchase.
Under the new lending arrangements, loan-to-value ratios are up to 90 per cent, there is a maximum of two apartments per borrower on any development, rental guarantees will not be accepted and a cap of 25 per cent of any individual development or 10 units, whichever is the larger.