And Queensland is the Worst performing State in Australia on mortgage repayments. So why is this?
Mortgage defaults in Ipswich are very low by US and World standards.
First let's make the point that even in Ipswich, which is the worst performing area in mortgage repayment arrears. Its still pretty damn good compared to other real estate markets in the World.The results don't mean mortgage holders are defaulting on loans, but do point to economic hardship by region, caused by a one off event that will take another year or two to fully resolve.
The Fitch ratings 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.
Ipswich has a lot of low cost homes
The makeup of Ipswich home buyers is an important factor in mortgage defaults. Ipswich has many fine new estates. But it also has a lot of low lying flood prone and flood affected building areas, as well as a lot of older areas that were inundated.So these homes were lower value and these homes attracted home buyers with lower incomes. They got hurt more than homeowners on higher incomes.
The Floods of 2011 has had a major impact on mortgage defaults in Ipswich
The floods that swept through Ipswich impacted homes directly, and home values going forward.
After the floods people thought twice about buying a home in Ipswich.So house prices fell most there and people that were struggling yet not sell their homes.
Many homeowners did not have the right insurance
Many insurance companies never covered for flood damage and this has impacted on homeowners that were flood affected to recover form that damage.And post floods, the insurance premiums for those properties so affected are simply out of reach for many in those areas.
This has to reflect in home values and future mortgage conditions on those properties.
Ipswich industries were greatly impacted by the Brisbane Floods
Many Ipswich businesses were inundated by the Floods. This has hurt homeowners in many ways.- Many small businesses were not correctly insured and so many of these businesses never recovered.
- So both the business owners and their employees lost incomes.
- Many businesses that did get a payout decided to quit the area, as it would take the area years to recover fully, and they could see that they could take their money and reinvest elsewhere with less risk.
- Even where businesses stood down employees whilst the repairs were conducted. That can leave a hole in their budgets that takes years to make up.
Many of the mortgage lenders who operate in the Ipswich area cite a lot of cases of hardship and unemployment as contributing factors. Most of those relate directly to the Floods.
These factors affected many regions of Queensland, but Ipswich and Logan City were affected more because of the stronger concentration of borrowers with a lower average income, and those tended to be in low lying areas.
Summary of Other badly performing Mortgage repayment areas in Australia
Mortgage Delinquencies: Australia 10 worst-performing regions with more than 30 days in home loan arrears:- Ipswich City - 2.14%
- Outer SW Sydney - 1.89%
- Gold Coast West - 1.89%
- Central Coast Sydney - 1.85%
- Logan (& Beaudesert) - 1.84%
- Caboolture Shire - 1.76%
- Fairfield-Liverpool - 1.73%
- Gold Coast East - 1.69%
- Blacktown - 1.60%
- Outer West Sydney - 1.60%
Source: Mr Mortgage
