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First home buyer loses deposit after NAB backflip over apartment size

A first home buyer has lost a $41,000 deposit on a St Kilda apartment after the National Australia Bank walked away from the loan at the last minute arguing the property was too small. 

In a further sign that banks are tightening lending standards to high-risk segments of the property market, 20-year-old Alexander Tashevski-Beckwith said he was left without the deposit he paid and is on the hook for further tens of thousands of dollars in vendor fees after the bank reneged on the loan a day before settlement. 

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"They haven't even left me with time to renegotiate another loan," he said.

"I'm in this terrible financial position right now." 

Mr Tashevski-Beckwith said he was approved for the loan for the 47-square-metre, one-bedroom apartment in a series of emails and phone conversations between himself, his mother Marika Tashevska and a NAB bank manager in December. 

But he said he was left without final loan documents when preparing to settle the property last week despite repeated attempts to contact the bank to get confirmation.

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Ms Tashevska then received a phone call from the bank at 4.30pm the day before settlement saying the bank manager who had been handling the loan had "resigned" and that it was the bank's policy not to lend to properties under 50 square metres.

"We were shocked," Ms Tashevska said. "There was no time, no due diligence given."

Compensation possibility

NAB told Fairfax Media it was prepared to offer compensation for any financial loss if it was the case that the bank had been at fault.

It would not comment on why the bank manager in question had left the bank, nor why Mr Tashevski-Beckwith was not warned of the bank's policy not to lend to apartments under 50 square metres. 

"We are keen to achieve the best outcome for [the family]," a spokesman said. 

The banks are reining in lending to riskier segments of the housing market amid a crackdown on residential mortgage lending by the banking regulator, the Australian Prudential and Regulatory Authority. 

Peter White, executive director of the Finance Brokers Association of Australia, said loan approvals took various forms and were often conducted over email or phone as in this case.

Mr White said it had long been difficult to get funding for apartments under 50 square metres due to concerns around resell value, but that these concerns had likely increased under the crackdown.

"It revolves around the ability to sell these if you gear them too high," he said. 

"There's only a couple of non-banks that will consider looking at small studio apartments less than 50 square metres."

Size matters

Mr Tashevski-Beckwith said he had discussed the property's size with the bank manager before the sale and was led to believe there were no problems. 

"They said, 'we have a 50-square-metre rule, but it should be fine'," he said. 

"They never led me to believe there was any concern there." 

The science student said he had been studying part-time to save up money for the deposit.

"I jumped through all the hoops, I did everything they wanted me to, then at the end of the day they ripped the rug right out from under me."

NAB said that generally it did not approve finance for properties under 50 square metres. 

It declined to say whether its bank managers received commissions on approvals for loans.

"NAB is committed to lending responsibly. In evaluating home loan applications, we assess the property to be used as security against the loan, and consider any market or economic risks that may be associated with it," the spokesman said. 

Black list

NAB has previously identified Melbourne CBD, St Kilda Road Central and Abbotsford as postcodes of future risk, where it was capping loan-to-valuations for new lending at 80 per cent. 

APRA said on Monday that the banking sector had "appreciably improved" its residential lending standards over the past 18 months as a result of its crackdown on high-risk lending. 

Meanwhile, Australian Bureau of Statistics figures out on Tuesday showed growth in new lending to housing investors has accelerated to its fastest annual pace since early 2015, when banks were forced to crackdown on landlord buyers amid fears the property market was overheating.

The value of new loans approved for property investors jumped 4.9 per cent in November, and this lifted year-on-year growth in this segment to 21.4 per cent, a 19-month high.

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