Wednesday, December 18, 2013

Are Cairns mortgage arrears really that bad?

The Cairns Post has reported today on the latest mortgage delinquency report from Fitch Ratings: Cairns home loan borrowers lag on loan repayments.

This ranks "Far North and West Queensland ranked number eight for the 10 worst performing regions in Australia by number of mortgages in arrears." I can't think of an obvious rationale but for some reason in this analysis Cairns gets lumped in not just with Far North but all of Western Queensland:
 
So we should possibly not put too much weight on the relevance of that statistic for our local economy? The numbers from Fitch are presented in two ways. The number of mortgages 30 days or more in arrears as a percentage of the total number and the percentage in arrears on the basis of the value of the mortgages. The percentage on the basis of valuation will typically be higher than that based on number.
 
The numbers on the above map relate to value of mortgages. The basis of the report by the Post isn't clear but implication would appear to be on the number and not the valuation yet the numbers provided appear to be those higher, based on valuation:

CAIRNS homeowners are falling behind on loan repayments despite record low interest rates and a recovering local economy.
The latest Fitch Ratings mortgage delinquency report revealed 1.69 per cent of mortgage holders in Cairns were more than a month in arrears and 0.75 per cent were behind by 90 days.
Fitch director James Zanesi said the figure at the end of September was worse than the Australian average of 1.25 per cent.
I presume the numbers presented here for Cairns are from further enquiries by the Post or more detailed report because I can't find them on either basis in the PDF and Excel reports emailed to me by Fitch which don't include that level of local detail.

The reports provided do include some details for 76 Queensland postcodes including these from Cairns via a quick cut & paste with value and number as a percentage of total mortgages:

Postcode       Value     Rank    Number    Rank        Ratio
4869 2.65 5 1.85 6 1.43
4879 1.75 29 1.61 14 1.09
4868 1.48 46 1.10 50 1.35
4870 1.42 51 1.02 54 1.39

The postcode information provided is not a complete listing for Queensland so 4878 is missing from our jigsaw puzzle. Postcode 4869 is certainly not pretty ranking at 5 and 6 out of the 76 for highest rates of arrears in Qld. What may surprise is that 4879 at the beaches also stands out with a high rate of arrears. The ratio by which value of arrears exceeds number is also quite low in 4879 but no idea if this is significant.

Yet again, we should not assume either that these numbers for Cairns are way out of line with relevant comparisons. Queensland arrears are also higher than the national average. Within that comparatively low arrears in Brisbane clash with some high rates around areas such as the Gold Coast. Surfers Paradise easily tops the arrears by valuation!

There is also no information related to investor or occupier mortgages. More detail and analysis would be required to draw any insights from this report on a regional basis.

Another recent post: Housing & Mortgages

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