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Prime RMBS loans more than 30 days in arrears (%). Source: S&P Global Ratings.
Home loan borrowers in postcodes containing about 90 suburbs have the worst level of mortgage arrears in Australia, with experts warning even rate cuts won’t help some of those hardest hit.
The top 10 worst performing postcodes were in three states, with the latest S&P Global Ratings market report warning one in particular is dominating amid major upheaval to its housing market and recent price falls.
It expected “interest rate cuts will ease debt serviceability pressures” for many struggling homeowners, but they won’t come fast enough to some.
“We believe they won’t make a material difference to arrears levels because they’re likely to be gradual,” the S&P Global Ratings report said.
SCROLL DOWN TO SEE LIST OF AREAS IMPACTED
Overall level of prime home loans in arrears. Source: S&P Global Ratings.
Victoria dominated the top 10 worst performing postcodes list, making up half the list with five postcodes with around 25 suburbs, New South Wales was close behind with four postcodes containing 50, and Queensland had one postcode with about a dozen.
“The state of Victoria has the nation’s highest arrears and highest unemployment levels,” S&P Global Ratings found.
Around 1.8 per cent of prime home loans in Victoria were in arrears, with its five worst postcodes showing significantly worse results with 3064 at 3.1 per cent in arrears – containing places like Craigieburn, Donnybrook, Roxburgh Park; 3023 was at 2.81 per cent which includes the likes of Burnside, Cairnlea, Deer Park; 3805 at 2.59 per cent has Fountain Gate, Narre Warren; 3810 at 2.11 per cent is around the Pakenham area and Rythdale and 3338 at 2.07 per cent covers places like Brookfield, Cobblebank, Strathtulloh.
New South Wales – which had four postcode make the worst performers list – has the second highest overall prime loans result in the country with 0.93 per cent in arrears – areas within 2261 have 2.78 per cent in trouble covering places like Bateau Bay, Berkeley Vale, Shelly Beach, The Entrance; 2170 is on a 2.44 per cent arrears level including Casula, Liverpool, Lurnea; 2148 is at 2.02 per cent around Blacktown, Kings Park, Prospect; and 2560 is on 1.94 per cent default rate which includes places like Campbelltown, Englorie Park, Rosemeadow.
This Victorian home – and a neighbour – are both up for mortgagee sale with this one’s price guide slightly higher at $1.5-$1.6m.
A neighbouring home in Victoria seized by a mortgagee has a price guide of $1.1-$1.2m.
Percentage-wise Northern Territory (0.91 per cent), Western Australia 0.80 per cent and Australian Capital Territory 0.66 per cent were all showing the next highest levels of mortgage arrears overall.
Queensland and South Australia were tied on 0.65 per cent followed by Tasmania’s 0.6 per cent, but the Sunshine State had one postcode in the top 10 worst performers’ list – 4211 which has 2.2 per cent of prime home loans in arrears covering places like Advancetown, Carrara, and Nerang on the Gold Coast.
“The largest year-on-year declines in arrears were recorded in Western Australia, Northern Territory, and Queensland,” S&P Global Ratings found.
“Arrears are higher in postcodes on the fringes of more populous capital cities, where debt-to-income ratios are typically more stretched”.
State 30-plus days RMBS arrears (%). Source: S&P Global Ratings.
Arrears in NT and ACT are subject to greater volatility given the small size of loans outstandings. Arrears based on loan balances in outstanding prime RMBS transactions rated by S&P Global Ratings. Source: S&P Global Ratings.
Australia’s overall level of arrears (0.87 per cent for prime loans) was quite modest thanks to low unemployment, refinancing opportunities, savings buffers, and property price dynamics that give struggling homeowners an early out – though the report does warn it was yet to peak.
“While we expect unemployment to rise, it will likely remain below prepandemic levels. Property price growth also gives existing homeowners greater agency in self-managing their way out of financial stress.”
“Ongoing cost-of-living pressures and depleted household savings will add further strains on household budgets for a small proportion of borrowers who are more highly leveraged. For these borrowers, lower interest rates and property price growth will ease debt serviceability pressures and help to curtail potential losses.”
One of the new areas of concern at present was the vast south east Queensland region – home to around 3.8 million people and 1.88m properties – impacted by fallout from cyclone Alfred.
“Flooding in more densely populated cities like Brisbane, could have an impact on arrears levels, particularly in transactions with higher exposure to Queensland and affected areas,” the report warned.
WORST POSTCODES | LOANS IN ARREARS (%)
Victoria
3064 3.1%
Areas within postcode: Craigieburn, Donnybrook, Kalkallo, Mickleham, Roxburgh Park.
3023 2.81%
Areas within postcode: Burnside, Burnside Heights, Cairnlea, Caroline Springs, Deer Park, Deer Park North, Ravenhall.
3805 2.59%
Areas within postcode: Fountain Gate, Narre Warren, Narre Warren South.
3810 2.11%
Areas within postcode: Pakenham, Pakenham South, Pakenham Upper, Rythdale.
3338 2.07%
Areas within postcode: Brookfield, Cobblebank, Exford, Eynesbury, Melton South, Strathtulloh, Weir Views.
New South Wales
2261 2.78%
Areas within postcode: Bateau Bay, Bay Village, Berkeley Vale, Blue Bay, Chittaway Bay, Chittaway Point, Glenning Valley, Killarney Vale, Long Jetty, Shelly Beach, The Entrance, The Entrance North, Toowoon Bay, Tumbi Umbi
2170 2.44%
Areas within postcode: Casula, Casula Mall, Chipping Norton, Hammondville, Liverpool, Liverpool South, Liverpool Westfield, Lurnea, Moorebank, Mount Prichard, Prestons, Warwick Farm.
2148 2.02%
Areas within postcode: Arndell Park, Blacktown, Blacktown Westpoint, Huntingwood, Kings Park, Marayong, Prospect
2560 1.94%
Areas within postcode: Airds, Ambarvale, Appin, Blair Athol, Bradbury, Campbelltown, Campbelltown North, Cataract, Englorie Park, Gilead, Glen Alpine, Kentlyn, Leumeah, Macarthur Square, Rosemeadow, Ruse, St Helens Park, Wedderburn, Woodbine.
Queensland
4211 2.2%
Areas within postcode: Advancetown, Beechmont, Binna Burra, Carrara, Clagiraba, Gaven, Gilston, Highland Park, Lower Beechmont, Mount Nathan, Natural Bridge, Nerang, Nerang DC, Numinbah Valley, Pacific Pins, Southern Lamington.
