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

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 20, 2022. 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy