WA worst offender for mortgage delinquencies, Victoria at 15-year highs
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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 | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
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%.