Queensland tourist destinations were nine of the top ten regions for mortgage deferrals in the first wave of COVID lockdowns.
That's according to new analysis from credit reporting agency Equifax, which found Noosa, Surfers Paradise, Coolangatta and the Whitsundays had the highest proportion of deferrals compared to the national average.
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Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
General Manager Advisory and Solutions at Equifax Kevin James said the data revealed the extent of the damage to the tourism-dependent Queensland regions.
“Tourism is a major industry for Queensland, and with international and domestic visitors curtailed during the pandemic, tourist hotspots have faced reduced occupancy rates, lower incomes and higher levels of unemployment leaving mortgage holders feeling the pinch," Mr James said.
"With the Queensland border beginning to reopen to parts of NSW and SA this week, we expect to see a bounce back as tourism dollars start to flow back into the region."
Proportion of mortgage deferred by accounts
The release of the data coincides with the Queensland eviction ban ending today, with the state the only one in Australia deciding not to extend the moratorium on residential evictions.
Melbourne suburbs show signs of heightened mortgage stress
Tullamarine-Broadmeadows on the outskirts of Melbourne was the only non-Queensland location to make the top ten list of mortgage deferral hotspots.
However, several other Melbourne fringe suburbs also showed signs of heightened mortgage stress in May when the data was collected.
Analysis showed Wyndham, Casey-South, Whittlesea-Wallan, Melton-Bacchus Marsh, and Boroondara all had a high number of mortgage deferrals compared to the national average.
Number of mortgages deferred by accounts
Mr James said the financial hardship seen as these suburbs could be attributed to a higher prevalence of lower socio-economic suburbs, with low-income households and young people just starting out on the property ladder.
“COVID-19 is having a particularly negative effect on the employment of young people," he said.
"For those without significant savings, it isn’t easy to service a home loan when cash flow dries up.
"We know Melbourne’s second lockdown will have further exacerbated the difficulties we’ve seen in our initial analysis on the available May data."
Middle-aged Aussies struggling to pay their mortgage
Equifax found Australians aged 36 to 45 were the most likely age group to defer their mortgage repayments through the pandemic.
“There are more middle-aged people seeking mortgage payment relief than any other age group," Mr James said.
This group is likely to have relatively high outstanding mortgage balances and may have been harder hit with business lay-offs or lower-income from JobKeeper payments.”
The 26 to 35 age group fared only marginally better, accounting for the second-largest number of mortgages deferred.
Over 66-year-olds also had higher levels of deferrals, which was likely a reflection of deferred investment property loans.
Proportion of mortgages deferred - age by account
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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