Mortgage delinquency on the rise in Victoria

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Home loan borrowers in Victoria appear to be struggling to repay their mortgages a bit more than most, according to new data from Fitch Ratings.

The financial market research provider’s latest “Mortgage Delinquency by Postcode” report shows Victoria has experienced an unexpected deterioration in mortgage performance.

Victoria recorded a delinquency rate of 1.37% at end March 2014, which is up 17bp from its September 2013 rate.

It was the only state to experience an increase in delinquency rates (8bp) in the 12 months to March 2014, despite favourable monetary policy.

Hume City, Victoria was the worst performing region in the country with a 30+ days delinquency rate of 2.93% at end March 2014.

Melton-Wyndham (VIC) and Northern Outer Melbourne also recorded declines in mortgage performance that were significantly above the national average.

Further, seven of the worst performing suburbs (four of the top five) were located in Victoria.
Fitch Ratings Australia director James Zanesi said Victoria’s rising unemployment rate was likely to be the cause of such an unexpected rise in the delinquency rate.

The rise in delinquencies was concentrated in the outer northern and outer west regions of Melbourne, he said.

“Historically, these regions have shown strong sensitivity to mortgage rates due to socio-economic factors like high unemployment and low-income households.”

The decline in mortgage performance was likely to reflect the trends in the local economy and the high unemployment rate in North West Melbourne, Zanesi said.

However, the data also showed that:
 
  • Queensland – with a delinquency rate of 1.42% - was actually the worst performing state overall, even though the Gold Coast’s rates continued to improve.
  • Budgewoi, New South Wales has become the worst performing postcode in the country, taking over from Surfers Paradise (QLD).
Zanesi told media that, by historical and international standards, Australia’s delinquency rate was actually low.

This was likely to be due to the stable economy, reasonably low unemployment rates and favourable monetary policy.

Australia’s 10 worst performing post codes
 
RANK POSTCODE STATE SUBURB 30+ DAY ARREARS (%)
1 2262 NSW Budgewoi 3.7
2 3228 VIC Torquay 3.7
3 3756 VIC Wallan 3.5
4 3337 VIC Melton 3.5
5 3975 VIC Lynbrook 3.5
6 2168 NSW Green Valley 3.4
7 4879 QLD Palm Cove 3.3
8 3214 VIC Corio 3.2
9 3064 VIC Craigieburn 3.2
10 3024 VIC Wyndham Vale 3.1

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Comments
  • Brian says on 09/07/2014 11:14:45 AM

    How did you overlook Torquay and offer no explanation for the result.

  • YIP says on 09/07/2014 12:04:42 PM

    @Brian.
    The full report, entitled "Australian Mortgage Delinquency by Postcode - 31 March 2014", is available on www.fitchratings.com
    Regards, YIP

  • Stu Varidel says on 14/07/2014 11:22:02 AM

    I think that you have a mistake as Palm Cove is in QLD not NSW...?

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