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Rising rates hit home owners hard Print E-mail

Dec 21 2010 businessday.com.au

Rising interest rates are translating mortgage stress into delinquencies nationwide, a report finds.

One home borrower in 100 was a month or more behind on their mortgage payments by September 30, and delinquencies increased considerably after six interest rate rises in 12 months, global credit ratings agency Fitch says.

Western Sydney continues to shoulder the worst mortgage delinquency rates in Australia, with the Fairfield - Liverpool region having one delinquent mortgage in 60 and a monthly delinquency rate of 2.81 per cent, Fitch said.

The percentage of borrowers who are at least one month behind on their mortgage payments for borrowers in Queensland and Western Australia deteriorated markedly over the past year and especially in the September quarter, it said.

Western Australia is now the worst performing state with monthly arrears at 1.95 per cent, and most regions of Queensland (except inner Brisbane) have followed suit.

By contrast, regions showing the most improvement from September 2009 to September 2010 were all in Victoria, with six of the ten best performing regions in Melbourne where the highest delinquency rate was 0.54 per cent.

Fitch's next report will account for the November interest rate rise which, according to business researchers DBM Consultants led to a fall in business borrowers' satisfaction with the big four banks - the first decline in six months.

DBM managing director Dhruba Gupta said the fall in business bank customer satisfaction levels was a departure from the upward trend evidenced over the past six months.

"We did find clear evidence that negative reaction to the latest interest rate rises was a factor in the lower satisfaction scores."

Westpac remained the most popular lender among business customers, with CBA falling to second place along with rivals ANZ and NAB.

 
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