Queensland Mortgage Arrears Worst in Three Years, Fitch Says

Mortgage delinquencies in the north- eastern Australian state of Queensland have risen to the highest in more than three years as floods and higher interest rates pushed up arrears, Fitch Ratings said.

Some 2 percent of mortgages in Queensland were in arrears in the six months to March 31, compared with 1.54 percent six months earlier, the highest since the ratings company starting publishing the reports in November 2007, Fitch said in an e- mailed report. Across Australia, 1.76 percent of loan repayments were late by 30 days or more as of March 31, according to the data, which represents about 17 percent of mortgages in the country.

“The Queensland floods have partially contributed to the increase in arrears,” analysts led by James Zanesi, associate director at Fitch, wrote in the report. The variable performance is a reminder to investors in residential mortgage backed securities “that the geographic diversity of the portfolio is an important attribute to be considered.”

Queensland’s capital city Brisbane saw home prices fall 3.1 percent in the three months to April, compared with a national drop of 1.2 percent, according to figures from real estate researcher RP Data. Almost two months of flooding at the start of 2011 inundated about 40,000 homes in Brisbane.

Victoria was the best-performing state, with delinquencies at 1.34 percent, and New South Wales saw arrears rise to 1.93 percent, Fitch said. Arrears rose in all six Australian states.

To contact the reporter on this story: Nichola Saminather in Sydney on nsaminather1@bloomberg.net