Ratings agency Moody's recently warned of the possibility rising mortgage defaults in New South Wales and Victoria due to the massive run up in debt that has seen home prices surge over the past five in those states.
Across Australia, household debt has risen from 161 per cent of disposable income in 2012 to 188 per cent in 2017.
Like other analysts Moody’s warn that if interest rates go up so will mortgage delinquencies.
And while superficially that makes sense, the underlying premises that rates will go up is flawed.
With low inflation, an economy that’s bumbling along and wages going up more slowly than inflation for many workers, there is no way the RBA is going to raise interest rates any time soon.
At the same time Corelogic estimates the total value of our residential housing markets at $7.5 trillion and the value of loans against all these properties is in the order of $1.8 trillion – that’s a loan to value ratio of less than 25%.
Of course, some investors and home buyers have bitten off more than they can chew and are in mortgage arears but most are not.
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In fact, most are ahead in their mortgage payments and currently overall mortgage delinquencies are at a reasonably low level of 1.45 per cent.
Not surprisingly, most of the best-performing postcodes were located in capital city regions where employment is concentrated in professional services.
Ten of the 20 best-performing postcodes in Australia were in Sydney, while six were in Melbourne.
Postcodes with the lowest rate of mortgage delinquencies:
|3204||BENTLEIGH||Melbourne - Inner South||VIC||0.00%|
|2118||CARLINGFORD||Sydney - Parramatta||NSW||0.00%|
|2065||CROWS NEST||Sydney - North Sydney and Hornsby||NSW||0.00%|
|3146||GLEN IRIS||Melbourne - Inner East||VIC||0.00%|
|2088||MOSMAN||Sydney - North Sydney and Hornsby||NSW||0.00%|
|4160||ORMISTON||Brisbane - East||QLD||0.00%|
|2010||DARLINGHURST||Sydney - City and Inner South||NSW||0.02%|
|3084||BANYULE||Melbourne - North East||VIC||0.10%|
|2093||BALGOWLAH||Sydney - Northern Beaches||NSW||0.13%|
At the other end of the spectrum locations with exposure to the resource and mining sectors dominated Moody's list of areas with the highest mortgage delinquencies in November 2017.
|4825||ALPURRURULAM||Queensland - Outback||QLD||4.31%|
|6066||BALLAJURA||Perth - North East||WA||4.00%|
|6056||BASKERVILLE||Perth - North East||WA||3.72%|
|6030||CLARKSON||Perth - North West||WA||3.69%|
|4114||KINGSTON||Logan - Beaudesert||QLD||3.69%|
|6430||BINDULI||Western Australia - Outback||WA||3.49%|