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AU Mortgage delinquencies rise across Australia

Property Here - Tuesday, July 02, 2013

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Source: Fitch Ratings.

Source: Fitch Ratings. Source: Supplied

INTEREST rate cuts have failed to stem the number of mortgage defaults across Australia, with tourism and retirement postcodes topping the list of repayment blackspots.

Seachange town Nelson Bay in New South Wales has regained the dubious title of the most mortgage delinquent region in Australia, according to Fitch Ratings.

Between September 30, 2012 and March 31 this year, the proportion of mortgage holders more than 30 days behind on their repayments was almost 7 per cent.

The Nelson Bay district includes the areas of Corlette, Fingal Bay, Nelson Bay and Shoal Bay and has been among the worst-performing postcodes since Fitch first published its report in 2007.

Fitch blamed the high delinquency rate in Nelson Bay on "stagnation in the local housing market, which lead to an accumulation of arrears in the 90-plus day bucket".

"Properties that are in arrears in Nelson Bay tend to be high-value, where the mortgage balance is on average almost three times the average loan balance in the area," says Fitch.

Surfers Paradise, the epicentre of the struggling Gold Coast property market, showed a slight sign of improvement falling from third most delinquent postcode by value to tenth spot, with its arrears rate dropping from 4 to 3.4 per cent.

Other regions where mortgage holders are struggling most to meet repayments include Montrose in Tasmania (5 per cent), Budgewoi on the NSW central coast (4.4 per cent) and Kingston between the Gold Coast and Brisbane (3.8 per cent)

Fitch notes that thirteen of the 20 worst-performing postcodes were in NSW, eight of which were in western and south-western Sydney.

Montrose remains the hardest hit postcode by number of mortgages in arrears, with 36 out of 1000 homeowners in delinquency.

Overall, the default rate across Australia increased to 1.45 per cent at end of March 2013, up from 1.2 per cent at the end of September.

"Delinquencies across all six states have increased significantly since September," Fitch notes.

Queensland remained the worst performing state for 30-day arrears.

Delinquencies in Queensland increased 1.4 per cent at March 31, up 25 basis points from 1.2 per cent at September 30, but Fitch analyst, James Zanesi, said it had not worsened as much as other states.

Despite the drop in interest rates, Mr Zanesi told The Courier-Mail that the results showed the Reserve Bank's decision to reduce the cash rate did not have a positive impact on mortgage performance across the nation.

"Christmas spending and an increase to household expenses may have offset the benefits of the cuts,'' Mr Zanesi said.

"The increasing number of delinquent borrowers in lower income areas could indicate there are some serviceability problems which can't be solved by monetary policy.''

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