Rate rises start to bite WA households

Western Australia has the lowest level of mortgage stress in the nation, yet the value of mortgages in arrears is growing faster than in any other state, according to data from ratings agency Fitch.

WA, which has been the best-performing state since August 2005, posted the biggest increase in mortgage delinquency for the six months to March 31.

It boosted the state's total delinquency rate from about 1 per cent to 1.4 per cent - the lowest nationally, but only by a small margin.

High Wycombe was the worst performer, with 3.6 per cent of the value of all mortgages in the suburb in arrears after 30 days.

It placed the suburb 48th in a national ranking of the worst-performing suburbs, up from 135th six months ago.

High Wycombe was closely followed by postcode 6064, which includes Alexander Heights, Girrawheen and Marangaroo (3.4 per cent).

Other suburbs with a delinquency rate of 3 per cent or above included Secret Harbour, Anketell, Kwinana and Parmelia.

According to Fitch managing director Ben McCarthy, the data shows a significant change in the WA property market since September last year.

"The trend for WA is interesting, because the worst-performing suburb six months ago had a delinquency rate of 2.1 per cent. Now, there are 10 times that [number of suburbs with a higher rate]," Mr McCarthy said.

He said the situation was exacerbated by the fact that there was little price growth in the residential market.

"Six months ago, WA had a very low level of mortgage stress, and a lower level than would normally be expected," Mr McCarthy said.

"With property prices rising so fast, if people got into trouble, they would just sell. Since property prices have stalled, that opportunity to sell out has gone."

Mr McCarthy said the numbers were expected to get worse, because interest rate rises in February and March had not been captured by the latest data.

"Interest rates are now at least 0.5 per cent higher, and petrol prices are probably 20 per cent higher, so that will have an impact," he said.

While these factors will affect all states, WA is expected to overtake both Queensland and South Australia in the next six months, given it is at the top of the property cycle.

"In those states, property prices are still going up, whereas WA is at the top of the market. I wouldn't be surprised if WA got to where Victoria is [in terms of mortgage delinquency]," Mr McCarthy said.

Fitch calculates its ratio of mortgage delinquency by dividing the value of mortgages in arrears by the total value of mortgages outstanding for a suburb.