Ipswich's mortgage misery
MORE Ipswich home owners are behind on their repayments than in any other region in Australia, according to a new report from international ratings agency Fitch Ratings.
The annual report, which looks at how many mortgage holders are more than 30 days in arrears, ranked Ipswich City first on a list of the worst-performing regions by number of home loan delinquencies.
More than one in 50 mortgages in the Ipswich region are over a month in arrears, with a 25% increase being recorded in the six-month period from September 2011 to March 2012.
Overall, 2.14% of all mortgages in Ipswich City are now more than 30 days in arrears, up from just 1.28% in March 2010.
Report co-author James Zanesi said the result was surprising and no specific reasons could be identified for the spike.
"In the last six months, or even the last year, the Ipswich region has deteriorated while a lot of other regions have improved," Mr Zanesi said.
"We contacted a lot of lenders who operate in this area and they cite a lot of cases of hardship and unemployment as contributing factors.
"These factors affected all of Queensland, but Ipswich and Logan City were affected more because of the stronger concentration of borrowers with a lower average income."
Queenslanders Credit Union chief executive John Weier said he was surprised at the result.
Mr Weier said about one third of his company's customers were in the Ipswich region and internal data didn't support the Fitch findings.
"There is no outstanding problems. It's business as usual as far as we are aware," Mr Weier said. "There are a few more arrears because of some of the redundancies that have been going on recently, but not in the Ipswich area.
"We monitor all delinquencies from 30 days, but we don't have any real issue there at all."
Queensland as a whole was the worst-performing state in Australia, with the 30-plus delinquency rate at 1.86% as of March this year.
The results don't mean mortgage holders are defaulting on loans, but do point to economic hardship by region.
Ipswich Chamber of Commerce president Brett Kitching also had not anticipated the spike in numbers.
"It sounds surprising to me considering the city is growing and continuing to develop," Mr Kitching said.
"We understand that economic times are sluggish, but we believe we are near the bottom of the cycle. We have population growth and significant development, which augur well for the future, but this is a worry at the moment."
A possible cause of the jump in mortgage arrears may be fallout from the January 2011 floods.
While the report couldn't draw a causal relationship, director of financial services at Ipswich-based Harding Martin Accounting Services Rob Rush said it wouldn't be surprising if the flood pain was a contributing factor.
"My view is this flood worked in three stages," Mr Rush said.
"You had three days to survive, three months of agony and three years of recovery.
"So we're really only halfway through that recovery phase."
10 worst-performing regions in Australia by percentage of mortgage holders more than 30 days in arrears:
- 10 Outer West Sydney - 1.60%
- 9 Blacktown - 1.60%
- 8 Gold Coast East - 1.69%
- 7 Fairfield-Liverpool - 1.73%
- 6 Caboolture Shire - 1.76%
- 5 Logan (& Beaudesert) - 1.84%
- 4 Central Coast Sydney - 1.85%
- 3 Gold Coast West - 1.89%
- 2 Outer SW Sydney - 1.89%
- 1 Ipswich City - 2.14%
Source: Fitch, ABS