Citi to require borrowers fork out 35% deposits in these 87 ‘blacklist’ postcodes

Thursday 10 August 2017

Article by Mozo

Buying an apartment in certain high-density suburbs in the nation's capital cities could now prove potentially more difficult following reporting from the AFR that a number of postcodes have been placed on a ‘blacklist’ by Citibank.

Citi to require borrowers fork out 35% deposits in these 87 ‘blacklist’ postcodes

Unit buyers in 87 postcodes, including many apartment hubs in Sydney and Melbourne, could be required to stump up home loan deposits as high as 35% under new restrictions imposed by the bank, with Citi reportedly concerned about an oversupply of units.   

Citi have now joined NAB, who were reported to have implemented a number of lending restrictions in October 2016, targeting a ‘blacklist’ of their own which included 120 postcodes across Australia.

“It’s not surprising that Citi has moved in this direction, because they’ll ultimately be looking to safeguard themselves against the threat of oversupply in these suburbs by locking in buyers with higher deposits,” said Mozo’s Property Expert Steve Jovcevski.

“While they’re not a big lender in Australia, it will be interesting to see if any of the larger lenders join Citi and NAB in tightening restrictions.”

34 of the 87 postcodes to emerge on the Citi blacklist, which was reported to have been sent around to its network of brokers, were in New South Wales while 27 were in Victoria.

The vast majority of postcodes on the list are apartment construction hotspots such as Waterloo and Parramatta in Sydney, and Docklands and Southbank in Melbourne.

Given the median price tag for a two bedroom unit in the inner city suburb of Ultimo (which featured on the Citi blacklist) is currently $940,000 according to data from Domain, a 35% deposit would require borrowers to fork out a whopping $330,000.

Jovcevski suspects that tougher requirements in these suburbs were likely to hit first home buyers the hardest, especially given that they’re less likely to have a sizeable deposit in the first place.

“Restrictions could potentially shift buyers from suburbs with oversupply issues to surrounding areas, but there’s no doubt that first home buyers will find it toughest.”

If you’re a first home buyer looking to make your home ownership dreams come true, the good news is that interest rates have become much more favourable for owners in recent months. To compare the top rates on the market make sure you pay a visit to the Mozo home loan hub which features over 500 home loans.

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