First home buyers warned of Albo risk, Victoria leads nation’s payment defaults – realestate.com.au

Victoria is home to the country’s pain capital, as one in 100 of the state’s mortgages is currently at least 30 days behind on repayments.

S&P Global Ratings has calculated that 1 per cent of state mortgages are in arrears, the highest level of any state – with only Canberra and the Northern Territory worse off.

And they come with a stark warning that first home buyers who take advantage of the Albanian government’s extensive First Home Guarantee are putting themselves at risk of joining the dismal mortgage statistics.

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The Victorian figures are almost double the levels in Tasmania and Queensland, where it is closer to one in 200 home loan delinquencies, and well higher than in South Australia, around one in 150.

Melbourne also dominates the country’s worst-performing postcodes when it comes to keeping up with mortgage repayments, with six of the country’s ten worst results recorded in the Victorian capital – a list that has now dominated the country for 18 months.

Postcode 3064 around Craigieburn tops the list with almost one in 33 mortgage holders in arrears of 30 days or more, while Pakenham, 3810, came in third with 2.41 per cent of home loans in arrears in the September quarter.

Hoppers Crossing, 3029, Werribee, 3030, Frankston, 3199 and Melton South, 3338, are also among the ten most subordinated mortgages in the country, with payment arrears ranging from 1.59 per cent to 1.7 per cent.

Erin Kitson said Australia’s deficit improved, but one state stood out above the rest.

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S&P credit analyst Erin Kitson said it was worth noting that payment arrears in Victoria had fallen since rate cuts began in February, like everywhere else in the country, and were now at healthy levels.

But she said the country was still showing the worst signs of any state – a position it adopted from Western Australia 18 months ago.

Ms Kitson said there was “a fairly close link” between mortgage arrears and house price growth, and Victoria’s relatively weaker growth than other states in recent years could have meant homeowners were unable to sell properties they couldn’t pay the mortgage for – or even be unable to refinance their loans if they had low equity.

S&P Global Ratings’ analysis shows there are payment delays across Australia. Source: S&P Global Ratings.

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“And I think the high property taxes on investors have had an effect because they have created greater cash flow problems for investors,” she said.

With no further interest rate cuts expected this year, the analyst expects there will be little change in the final months of the year.

However, Kitson said the federal government’s extension of the First Home Guarantee in October, which would allow an unlimited number of potential new entrants to the market to borrow up to 95 per cent of the cost of their homes, could lead to more risks if the Reserve Bank were to raise interest rates in the future.

The Albanian government’s extension of the First Home Guarantee in October could make new entrants to the market more vulnerable to future interest rate increases. Photo: NewsWire / Martin Ollman

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“Any increase in household debt, especially if they are younger and do not have savings buffers or secondary assets, puts them in a more vulnerable position when the interest rate cycle changes direction,” she said.

In the rest of the country, the remaining postcodes in the top 10 for mortgage arrears were Baulkham Hills, 2153, at 2.48 per cent, Casula, 2170, at 2.27 per cent, Berkshire Park, 2765, where 2.2 per cent of mortgage holders were in arrears, and Camden, 2570, with a 1.52 per cent delinquency rate.

All areas were in NSW, which has a state-wide delinquency rate of 0.92 per cent – ​​the second worst after Victoria.

The Northern Territory was worse than any state, with 1.21 per cent of owners in arrears, while the ACT had 1.06 per cent.

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