Queensland has seen the largest rise in mortgage arrears of any state according to Fitch Ratings.
In an update to the ratings agency’s Australian Mortgage Performance report, Fitch has found Queensland arrears have risen to 2% from 1.54% six months ago.
“Arrears have been increasing sharply in the Gold Coast, Logan, and Ipswich, in turn contributing to Queensland’s increase in delinquency rate as borrowers’ serviceability has been impacted by higher interest rates and increasing cost of living and changes in local socio-economic factors. On the Gold Coast, the stagnation in the housing market has also contributed to the increase in arrears during the six months to March 2011,” Fitch associate director of structured finance James Zanesi said.
The ratings agency said it does not believe the natural disasters that plagued the state at the beginning of the year are the primary factor behind the rise in arrears. It has pointed out that unaffected regions like the Gold Coast and Logan City have contributed strongly to the state’s poor performance. Rather, Fitch has blamed regional unemployment and rising cost of living for the result.
However, Queensland was not alone in its sharp higher-than-average arrears.
Southwestern Sydney and the NSW Central Coast also saw higher delinquency rates, as did the south west region of W.A.
“Arrears in Western Australia and especially in metropolitan Perth have shown signs of stabilization compared to September 2010. The rebound in the mining industry and a slight improvement in employment over 2010 might have contributed to stable mortgage performance through the September 2010-March 2011 period,” he commented.
Having said that, our mortgage arrears are at very low levels compared to many overseas countries and with interest rates likely to be steady for some months, rising wages and more Australians saving rather than spending, it is unlikely that we’ll see many mortgagee sales.
Source: Broker News
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