Western Australia and Queensland have the highest proportion of homeowners with mortgage debt that is equal to or larger than the value of their property, a survey has found.
Roy Morgan Research on Thursday said 311,000 homeowners, or 6.8 per cent of all owner-occupiers with mortgages, had no equity in their properties.
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That means these households believed their property was worth the same or less than the amount they still owed on their home loan.
It came as National Australia Bank executives told a parliamentary inquiry the bank was taking a more cautious approach to lending for inner-city apartments in Melbourne and Sydney, where several experts have also warned of the potential for an oversupply of units.
Although on average homeowners have considerable equity in their homes, Roy Morgan's numbers highlight areas where borrowers face the prospect of owing the bank more than their property is worth, due to a falling market or weaker local conditions.
WA, where the property market is falling due to the mining bust, had the highest proportion of borrowers with no equity in their home, at 9.2 per cent, or 53,000 people. Queensland had the next highest share, at 7.5 per cent, or 68,000.
NSW had the lowest proportion of borrowers with no equity in their home, at 5.1 per cent, while 6.3 per cent of Victorian homeowners were in this position.
The proportion of households nationally with no equity in their home has fallen from 7.7 per cent in 2012, probably as a result of the rise in house prices in recent years.
Even so, the figure points to the risks created by the large amount of mortgage debt held by many Australians.
"With over 300,000 home borrowers having no real equity in their homes, this represents a considerable risk, particularly if home values fall or households are hit by unemployment," Roy Morgan's director of industry communications, Norman Morris, said.
Roy Morgan's numbers, based on survey data drawn from 50,000 interviews a year, are consistent with banks saying they are facing higher loan losses in mining-exposed areas.
While Sydney and Melbourne's property markets have largely avoided this trend so far, there have been repeated warnings of an oversupply of apartments in some inner-city areas of these two cities, causing banks to take a tougher stance in their new lending.
NAB chief executive Andrew Thorburn and chief operating officer Antony Cahill on Thursday signalled the bank had concerns about the inner-city apartment market in some parts of the country's two biggest cities, requiring borrowers to stump up a bigger deposit in these areas.
"In the apartment market in Melbourne and Sydney, we have pulled back our lending and our LVR [loan-to-valuation ratio] restrictions to about 60 per cent, in those inner-city postcodes where we've got large amounts of apartment development," Mr Thorburn said.
In response to risks created by low interest rates, Mr Thorburn said the bank assumed mortgage customers could manage interest rates of 7.4 per cent, even though most were paying less than 5 per cent.
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