One bank has revealed the Sydney hotspots it is monitoring most closely, following an influx of property investors into the area.
Mr Love named the Sydney suburbs in a speech last month at the St George Bank Flame Forum 2015, where his presentation included an internal ring in the Western suburbs and a broader ring around the areas mentioned.
“If you had a very high LVR investment property loan in that postcode, it is probably a group of loans we would want to monitor over a period of time,” Mr Love said.
“We are very interested in the volume of business that has been written in that area and we want to make sure we are writing to the right quality of customer going forward.”
But investors needn't be concerned about these developments just yet, according to Mr Love.
The bank is not planning on stopping investor lending in these areas, instead it has highlighted them for monitoring reasons in order to track their performance from a credit perspective.
“It is from a monitoring perspective to see how they perform. Looking at things like, what is that group of customers’ pre-payment rate compared to Sydney and across the board? We are certainly not saying we are going to slow lending in those geographies. It’s an area of interest,” Mr Love said.
The news follows the release of postcodes that pose a higher risk of mortgage default by NAB last week, with the bank now requiring investors in these suburbs to conform to tighter loan value ratios (LVRs).
The postcodes were divided into two groups – Group A and Group B.
Group A contains “areas where significant deterioration in credit risk has been observed”, the bank was quoted as stating.
Group B areas are deemed to pose less immediate risk, although they are “areas which are exhibiting characteristics which may indicate future deterioration in credit risk”, according to the bank.
Buyers in these suburbs will be required to conform to an 80 per cent LVR requirement on new and existing loan applications with NAB.