Home loan arrears are growing at a faster rate in the regional areas of Australia than the cities, as rising unemployment and the mining boom’s end makes an impact.
A report published by Standard & Poors charting the east coast mortgage arrears rate found that Cairns, Townsville and Wide Bay home owners were most likely to be at least 30 days behind in repayments on their home loans.
According to a recent report by S&P Global Ratings, the number of mortgage holders in arrears has jumped 18% in the past year to July, compared to the 2% growth among home owners in the cities.
The report noted that rising arrears in the regional areas is of particular interest as loans non-metropolitan areas make up approximately a third of total loans outstanding in prime Australian RMBS transactions.
“We expect mortgage delinquencies in metropolitan and nonmetropolitan areas to continue to diverge, but we do not expect this to affect our ratings on senior tranches of most Australian prime RMBS transactions, given the credit support available to senior notes, relatively modest weighted average loan-to-value ratios, and reasonable geographic diversity,” the report stated.
The report found that on the east coast Cairns, Townsville and Wide Bay home owners had the highest probability of being at least 30 days behind in their mortgage repayments.
But The Australian reported that North Queensland MP Warren Entsch had said Cairns was starting to recover from an economic downturn experienced by the city as a result of the end of the mining boom in neighbouring regional areas.
“We’re going from strength to strength in Cairns; there’s a number of different projects which have been on the backburner for years starting work now,” he said.
“There’s two cranes on the skyline in the city. That’s the first time I’ve seen that in about a decade.”