Fitch Ratings says in a report released today, that 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.
Budgewoi (2262), on the New South Wales' Central Coast, has topped the list for the second time as Australia's worst performing postcode in terms of missing housing loan repayments. With a 30+ days delinquency rate of 3.2%, Budgewoi has appeared 11 out of 14 times in Fitch's previous mortgage delinquency reports.
This year, Tasmania replaced Queensland as the worst performing state in Australia for mortgage repayments with a delinquency rate of 1.33%. This figure reflects Tasmania's high unemployment rate and low house appreciation over the past three years.
On average, the delinquency rate across Australia increased 9 basis points 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 36 basis points lower than 12 months ago.
Over the past two years, local unemployment and the housing market have been the major drivers in regional mortgage performance, particularly in the current low-interest rate environment.
Most of the 20 worst performing postcodes were in metropolitan regions, with the only exception being Mount Isa, a mining town in Far North QLD. However, metropolitan regions overall performed better than non-metropolitan areas, especially in Western Australia, Queensland and Northern Territory where the slowdown and job cuts in the mining industry have been detrimental to mortgage performance.
Christmas spending and the general cost-of-living affected the mortgage performance of regions in states that showed strong sensitivity to mortgage rates - such as the north-west of Melbourne and south-west of Brisbane - due to socio-economic factors like high unemployment.
For the first time, Mackay (QLD) became the worst performing region in Australia by dollar value, replacing Hume City (VIC), following worsening in 30+ day arrears. Mackay's performance deteriorated the most in the six months to end-March 2015.
The best performing regions in their respective states by value are: Lower Northern Sydney, Inner Melbourne, Inner Brisbane and Central Metropolitan Perth.
Fitch's 'Australian Mortgage Delinquency by Postcode' report can be viewed here.
