Banks restrict loans in risky mining towns Rent yield in mining towns is down. Banks are reining in home lending to investors in resource sector hot spots, as lower spending by miners hits regional property markets and prompts banks to reassess their exposure. Two of the country's biggest banks, Commonwealth and ANZ, have in recent weeks curbed riskier lending in areas that rely on resource industries. The moves follow sharp falls in rents in mining hubs, at a time when regulators have urged banks to maintain prudent credit standards in the $1.2 trillion mortgage market. In changes that took effect on Monday, Commonwealth Bank will cap at 8 per cent the rental yield it factors in for new property investment loans in mining towns. Explaining the policy to mortgage brokers, the bank said rental yields in some mining areas were "not sustainable" and it was minimising the risk of borrowers defaulting. It comes after ANZ added Queensland resources hub Gladstone and mining-exposed towns Chinchilla and Blackwater to a list of higher-risk postcodes. Areas on the list - all in Queensland and Western Australia - face an 80 per cent cap on loan-to-valuation ratios for new loans to property investors, while rental yields are capped at 10 per cent when the bank is assessing eligibility for credit. An ANZ spokesman, Stephen Ries, confirmed ANZ was applying "an extra level of caution" to lending in some mining areas under a policy introduced earlier this year. Towns that may be affected by the policy were heavily reliant on one mine, or had experienced strong growth in housing, he said. "We are continuing to lend in these towns and since this policy was introduced in January the majority of applications have been approved," he said. ANZ and Commonwealth Bank's moves to tighten credit criteria come as banks face pressure to limit higher-risk lending at a time of record-low borrowing costs. Managing director of mortgage broker Homeloanexperts.com.au Otto Dargan said banks had become more conservative in mining areas after realising high rental yields received during the peak of the construction boom were not sustainable. "During the construction phase, there's a huge influx of workers so the yields go through the roof, but they can come back down sharply as construction spending declines," Mr Dargan said. I think [the banks] have more exposure to mining towns than they would have liked. Among other big lenders, Westpac also has a policy of limiting low-deposit loans in "single-industry towns," including those that are dependent on mining. National Australia Bank does not have a formal policy on the issue, applying the same scrutiny to borrowers in other areas. While mining towns make up a small share of banks' outstanding loans, Australian Bureau of Statistics' figures published last week show the resources boom has caused mortgage lending to skyrocket in several resources hubs. The area with the fastest-growing mortgage costs between 2006 and 2011 was the Shire of Ashburton, in the Pilbara region of Western Australia, where typical monthly repayments leapt by 278.6 per cent, to $954. The next biggest increase was in Port Hedland, where repayments shot up by 140 per cent to $2600 a month over the same period. Surging house prices and rents helped drive the rise in lending, but in recent months returns in many mining towns fell due to weaker demand for accommodation. In the September quarter, rents in Port Hedland fell 10 per cent to $1300 a week and had plunged 35 per cent in annual terms, figures from the Real Estate Institute of Western Australia show. In Gladstone - where several multibillion-dollar liquefied natural gas plants are being built - vacancy rates jumped from 0.9 per cent to 5.8 per cent in the year to September, Real Estate Institute of Queensland figures show.