More and more borrowers are struggling to make their mortgage repayments, despite steep interest rate cuts over the past 12 months, with Sydney’s south-west suffering the most , according to Fitch Ratings.
Even though repaying a variable loan became cheaper over the period, Fitch says the national share of mortgages that had become delinquent rose from 1.2% to 1.45%.
‘‘The Reserve Bank of Australia’s decision to reduce the cash rate did not have a positive impact on mortgage performance in the six months to end-March 2013, in contrast to the six months to end-September 2012,’’ reads the Fitch report.
The Fairfield-Liverpool region of Sydney had the highest share of borrowers who were more than thirty days behind on their mortgage, after its delinquency rate rose from 1.82% to 2.37% and the NSW Central Coast had the next highest share of missed repayments, followed by the Gold Coast, Caboolture Shire in Queensland, and outer south-western Sydney.
The best-performing regions were Boroondara City in Melbourne, south-east inner Brisbane and Sydney’s lower North Shore.
Areas that suffer most from mortgage stress tend to have higher rates of unemployment and lower average household incomes.
Fitch said the slump in south-western Sydney suggested there was a limit to how much cutting interest rates could do to prevent people falling behind on their repayments and delinquency rates may have hit a ‘virtual floor’ late last year.