The small town of Quilpie in outback Queensland is not the destination you would associate with first-time home buyers.
- Residents of hinterland towns say banks are refusing home loans or demanding deposits of up to 50%
- They say it’s ‘zip code discrimination’ and lending criteria need to be updated
- Big four banks say it don’t happen
But for Mary McNair, 27, from Brisbane, it’s the only place she wants to be.
The barista moved to the remote town a year ago with the intention of settling down, but hit a roadblock when she tried to buy a house.
“We had a lot of trouble with the banks,” said Ms McNair, who runs a coffee stand.
“Either they didn’t lend for a property here, or they demanded such a high deposit you might as well pay for it all yourself.”
It took Ms. McNair and several mortgage brokers several months before they could secure a loan with a 30% down payment.
“It was just impossible,” she said.
“We were coming to the end of an application and [a bank] I would just say they don’t lend to postcodes here.”
“Unfair and Myopic”
Residents of West Queensland say banks either flatly refuse loans because of their remoteness or require deposits of up to 50%.
The big four banks – Commonwealth, National Australia Bank, ANZ and Westpac – said there was no postcode ban on finance and were actively lending to outback shoppers.
But Quilpie Shire Council chief executive Justin Hancock said that was simply not the case and called on banks to update their lending criteria.
“We have locals who have secure jobs and good salaries who have been turned down for loans because of a completely outdated set of loan criteria,” Mr Hancock said.
“They were told that if they applied for a loan in another region, they would be approved for more than double what they applied for in the hinterland.
“It’s unfair and short-sighted.”
Last year the council launched a grant to home builders in a bid to address the area’s housing crisis.
The scheme is underwritten by the council and allows anyone who buys a block of land in the county to be reimbursed up to $12,500 when they build and live in the home for at least six months.
There is some interest in the scheme, but Mr Hancock said many young families want to buy homes that have already been built.
“There are a lot of different hurdles that banks put in place and if we don’t find a way to lend money to residents to buy homes, we’re going to see homes go vacant and people leave,” he said. said Mr. Hancock.
“You’re going to see these little towns die.”
Comparison site William Jolly of Compare The Market said banks are becoming more conservative when it comes to lending in rural areas.
“Infrastructure development, employment prospects, climate risks, insurance premiums – all of these things can make it much harder for a bank to see a lot of potential value in a property in the future,” he said. he declared.
“Banks tend to look at the resale value of these properties and if there is a deterioration in job prospects or higher climate risk, they may see that as a problem.”
“All possible barriers”
Mechanic Rob Warner from nearby Thargomindah said he had hit “every possible barrier” trying to buy his local truck stop.
“When we approached the big four and the brokers, as soon as we put in the zip code, they pretty much said everything changes and no,” he said.
The situation was so serious that Mr. Warner had to ask the seller of the truck stop to guarantee the loan to him to get it approved.
“We were lucky to know the seller, but it’s zip code discrimination,” he said.
“It discourages anyone from moving to the hinterland. If people need a 40% down payment, no one will.”