The NAB is keeping close watch on the prices of inner city apartments and restricting what it will lend to buyers.
According to briefing papers for the bank’s half year results announcement, NAB is monitoring inner city postcodes including those with high apartment concentrations.
There are reports of a coming oversupply of inner city apartments in Sydney and Melbourne. Sales data shows some apartments in central Melbourne being resold at discounts of up to 30% from their off-plan price.
The NAB said its maximum loan to valuation ratio at which the bank will lend for these inner city postcodes is 80%.
Lending to these areas is less than 2% of of the bank’s total housing book.
The bank today posted a strong first half cash profit of $3.31 billion, a 6.5% rise.
Overall housing lending at the bank increased by 4% to $303.12 billion in the six months to March.
The bank is also closely watching the mining areas of Western Australia and Queensland where property values are down 15% to 60%.
The bank says its housing exposure to key mining towns is less than 1% of total home lending.
The maximum loan to valuation ratio at which the bank will lend for these “high risk postcodes” is 70%.
NAB customers are on average 14.7 monthly payments in advance on their home loans.
The bank’s net interest margins for housing lending have improved to 1.40% from 1.35%, as this chart shows: