Australia Beach Towns Have Highest Mortgage Defaults, Fitch Says

Australia’s tourist and coastal areas had some of the highest levels of mortgage delinquencies, while city centers had the lowest rates, Fitch Ratings said.

The Sunshine Coast and Gold Coast in Queensland state were among regions with the highest number of home loan payments more than 30 days overdue as of Sept. 30, the ratings company said in a statement. Parts of inner Sydney, Perth and Melbourne were the best performers, Fitch said. Across Australia, overdue home-loan payments dropped to 1.2 percent as of Sept. 30, compared with 1.6 percent six months earlier, Fitch said.

A cash rate matching a half-century low helped boost home prices by 1.8 percent in January from a year earlier, after a 0.4 percent decline in 2012, according to the RP Data-Rismark home value index. The central bank yesterday held the benchmark interest rate at 3 percent, while signaling it has room to cut further, as the local currency remains elevated.

“Coastal regions that rely on tourism are less affected by monetary policy and more by the high Australian dollar,” James Zanesi, Sydney-based associate director at Fitch, said in the e-mailed statement.

Investment property loans, concentrated in tourist areas and inner cities, fared similarly, Fitch said in a separate statement. Coastal areas including southwest Western Australia state, the Sunshine Coast and Gold Coast East were among the 20 regions with the highest value of home loans more than 90 days late. Loans in inner Sydney and inner Melbourne were among the best performers, beating the national average of 0.68 percent.

Investment properties had 1.51 times the number of payments more than 90 days late than mortgages backed by owner-occupied properties between March and Sept. 30, the company said.

“Investment property loans will have a higher probability of default in an economic downturn, as borrowers will try harder to protect their primary residence than an investment property,” Zanesi said in the statement.

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