Western Australia recorded the highest mortgage delinquency rate in the year to May of 3.38 per cent, while the Australian average was 1.94 per cent, according to a report from Moody's Investors Service.
Western Australia recorded the highest mortgage delinquency rate in the year to May of 3.38 per cent, while the Australian average was 1.94 per cent, according to a report from Moody's Investors Service.
WA has repeatedly scored higher-than-average arrear rates over the past six years, more than doubling from 1.52 per cent in 2014.
Moody's defined delinquent mortgages as those where loan repayments were past 30 days due.
Within WA, the mortgage delinquency rate varied from 3.2 per cent in Perth to 4.6 per cent in the rest of the state.
Areas in WA with particularly high rates included Outback WA (5.55 per cent), Mandurah (4.91 per cent), the wheatbelt (4.16 per cent) and Bunbury (3.97 per cent).
While the state’s unemployment rate improved to 5.7 per cent over the year to October, the underemployment rate was still high at 9.9 per cent.
Perth was also the only major city in Australia where incomes declined over the year to May, falling 0.7 percentage points.
Moody's said the unwinding of the mining investment boom had also weighed on mortgage performance in WA over the past five years.
“While the bulk of the economic adjustment from the unwinding has now occurred and the resource sector benefitted from higher prices and an improved balance between supply and demand in 2019, conditions were volatile,” the report said.
“We expect conditions in the resource sector will remain volatile and subject to risks, including environmental risks in 2020.”
Regions with exposure to the resources, mining and agricultural sectors dominated the list of areas with the highest delinquencies in May.
Nine of the 10 regions with the highest delinquency rates were either in WA or Queensland, with many of these regions exposed to industries related to the resources, mining and agricultural sectors.
Mandurah and South Australia’s outback recorded the largest increases in delinquencies over the year to May, up by 1.71 and 1.82 percentage points respectively.
Meanwhile, only Northern Territory recorded a decrease in delinquency rates, falling 0.24 percentage points.
But Northern Territory, South Australia and Queensland all sat above the Australian average at 2.42 per cent, 2.39 per cent and 2.06 per cent respectively.
ACT recorded the lowest rate of 1.3 per cent.
Moody's said it expected the Australian average delinquency rate to increase, given muted economic conditions and high household debt, but only moderately due to rising house prices and lower interest rates.
