WA worst offender for mortgage delinquencies, Victoria at 15-year highs

author-avatar By on October 27, 2020
WA worst offender for mortgage delinquencies, Victoria at 15-year highs

Photo by CHUTTERSNAP on Unsplash

Credit rating agency Moody's released data into mortgage delinquencies and revealed Perth suburbs make up eight of the top ten postcodes for 30-days-plus arrears.

Victoria's mortgage delinquency rate is the highest it's been since 2005, and in New South Wales the highest since 2013, while Western Australia took out top spot overall with a rate of 3.33%.

For suburbs, Ballajura (6066) in Perth's North-East has a mortgage delinquency rate of 7.13% as of May 2020.

The only non-Perth areas in the top ten are Ashcroft (2168) in Sydney's South-West in second place at 5.82%, and Australind (6233) in Bunbury, WA in tenth spot at 4.38%.

In the top 20 postcodes for mortgage delinquencies (i.e. behind on payments by 30 days or more), 16 are Western Australian, and all have delinquency rates 4% or higher.

By contrast, just one Perth suburb is a top-20 performer - Floreat (6014) in Inner-Perth at 0.58%.

The worst-performing suburb with the biggest uptick in delinquencies compared to May 2019 is Bayswater (6053) in Perth's North-east, up 2.26 percentage points. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
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Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 26, 2021. View disclaimer.

Meanwhile, the bulk of the top-performing postcodes are in Sydney and Melbourne, while Holland Park and Chelmer (4068) in Brisbane are the two best performers overall, with delinquency rates of just 0.18% and 0.15% respectively.

Australia-wide, the delinquency rate is 1.99%, and Moody's predicts this to increase in the coming months.

"Mortgage delinquency rates will continue to increase over the next year, given the ongoing economic fallout from the coronavirus," Moody's Investors Services vice president Alena Chen said.

"Economic conditions will remain uncertain, driving delinquencies higher. The economic recovery will be tenuous over the next year, with labour and housing markets remaining soft and government and lender support measures ending.

"Over the next year, mortgage delinquency risks will be high in regions with large economic and labour market dependence on industries such as tourism, hospitality and retail, which have been hit hard by coronavirus disruptions."

Moody's Investors Services' report also said household incomes will come under pressure when JobKeeper and the increased rate of JobSeeker end next year.

What's the bigger picture?

Mortgages coming off deferral can be considered 'delinquent', and half have resumed payments as of October.

Excess delinquencies can affect credit at the wholesale level, and investors' appetite in the mortgage-backed securities (RMBS) space.

Statistics as of August indicate 5-10% of loans in 'prime' RMBS portfolios are deferred, while 'non-conforming' i.e. sub-prime, that figure is 10-20%. 

Poor investments can lead to credit freezes, which can impact the availability of home loans to new borrowers - similar to what was seen during the Global Financial Crisis.

However, compared to the United States during the GFC, delinquency rates are incredibly low. 

Moody's-rated default rates in the US during the crisis (typical defaults are mortgages delinquent by nine months or more) hit 9.7%. 

Standard and Poor's-rated default rates hit nearly 13%. 


Disclaimers

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): Great Southern Bank, 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.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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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author-avatar
Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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