Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 27 August 2015

Delinquencies

Fitch Ratings released its latest mortgage delinquencies report for Australia Q1 2015 overnight, which showed that at a national level mortgage arrears are below their usual levels thanks to low interest rates. 

The report showed that Sydney has benefited from strong house price appreciation and low interest rates in particular. Noted Fitch:

"Sydney's mortgage performance has benefitted the most from the rise in house prices. Metropolitan regions, including those historically worst performing ones in western Sydney, have not experienced the usual deterioration in mortgage delinquency rates caused by Christmas spending."

There was of course some ordinary news in the release.

The worst performing state for delinquencies following a decade of flat house prices and high unemployment is now Tasmania at 1.33 per cent.

Mining towns such as Mt. Isa are unsurprisingly faring very badly, while Mackay is now the worst performing postcode in Australia by dollar value, with the 30 day+ delinquency rate rising to above 2 per cent. 

The mining slowdown and associated job cuts have hit non-metropolitan areas including regional Western Australia (especially Kalgoorlie, Broome), the Northern Territory, and regional Queensland (north and outback).

The worst performing postcode in terms of missed loan repayments was Budgewoi (NSW 2262) on the Central Coast of New South Wales. 

By contrast, accroding to Fitch the best performing areas were the inner suburbs of Sydney - particularly lower northern Sydney - inner Brisbane, inner Melbourne and Central Metropolitan Perth. 

No real surprises there. 

Summarised Fitch:

"On average, the delinquency rate across Australia increased 9bp to 0.99% at end-March 2015, up from 0.90% at end-September 2014. The strong house-price appreciation and lower interest rates slightly offset the negative impact of seasonal Christmas overspending, as arrears are 36bp lower than 12 months ago. "

A delinquency rate of 1 per cent - which is below the long run average - and down 36bp from one year ago  is a great result.