Ballajura worst for mortgage trouble: Moody's

Mortgage delinquency rates are worst in Western Australia and will continue to increase across the country more generally over the next year, according to Moody’s.

In the year to May 2020, 30-plus day delinquency rates increased across Australia, exacerbated by the economic fallout from the COVID-19 pandemic.

Despite WA being the only state to record a positive year-on-year change in state final demand, it also recorded the worst average delinquency rate in the country.

Eight of Australia’s 10 worst performing regions were in Western Australia, with the Outback and Wheat Belt ranking first and second, followed by North East and North West Perth.

The worst performing locality in the nation was Ballajura with a delinquency rate of 7.1 per cent, up 2 per cent on May 2019.

Dianella was third at 5.6 per cent, up 1.6 per cent, followed by Alexander Heights at 5.4 per cent.

16 of the 20 worst postcodes were in WA.

But Floreat was 18th among the 20 best performers at 0.6 per cent.

WA regions on average, excluding Perth, experienced the largest decrease in mortgage delinquency from May 2019, with the 30-day delinquency rate dropping by 0.55 per cent year-on-year.

However, compared to other states and territories, WA has had the highest mortgage delinquency over the past four years, this year recording a delinquency rate of 3.3 per cent.

And they are expected to worsen still.

Moody’s predicts mortgage delinquencies across the country will be driven higher over the next year with economic conditions being subject to uncertainty, labour and housing markets remaining soft, and government and lender support measures ending.

Regions with the highest exposure to coronavirus-sensitive industries such as tourism, hospitality, and retail, as well as those with extended lockdowns, will be at highest risk.

The report states that the economic conditions, and consequently the mortgage delinquency rates, will depend on each state’s ability to contain the virus.

Moody’s forecasts Australia’s GDP to grow 4.3 per cent in 2021, following a 5.3 per cent contraction this year, subject to further COVID-19 outbreaks and restrictions.