Queensland suburbs under extreme mortgage stress

The number of Queensland homeowners under extreme mortgage stress has begun to escalate with several areas feeling the pinch like never before. HOT SPOTS MAPPED

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The number of Queenslanders under extreme mortgage stress has started to escalate with several areas under pressure for the first time.

A spike in homeowners 30-plus days behind in the mortgage repayments is now sounding a warning bell for experts.

Mortgage arrears are rising off historic lows but climbing nonetheless as consecutive interest rate hikes begin to take effect.

New data by S & P Global Ratings shows a major shift across several Queensland areas, according to director Erin Kitson. “We are starting to see the beginnings of that upward arrears trajectory, but what some of these initial snapshots are starting to show is arrears movements are not just being confined to those mining legacy type of areas, now we’re starting to see the fringes of capital cities - mortgage belt type areas.”

S & P Global singled out Moreton Bay South in Brisbane’s north as having the largest year-on-year increase in Queensland in the 2022 year, with its level of 30 day-plus arrears hitting 0.88 per cent in December 2022, representing an 80 per cent change.

“It will be interesting to see how Moreton Bay South travels, whether that increase in arrears continues on or whether you now start to see some of those other outer suburb areas join the ranks where the arrears increases quarter on quarter or particularly year on year start to break away a little bit more,” Ms Kitson said.

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Homeowners across Queensland are facing increased mortgage stress as rates rise.

“Clearly across the board, interest rates are impacting everybody, that affects all households but the degree to which it impacts is going to be determined by income level and also the level of leverage of the borrower.

“Certainly, those mortgage belt areas and outer areas of capital cities where properties are more affordable – and therefore more likely to have higher representation of first homeowners – which generally are more highly leveraged, in this type of environment I think these are the types of borrowers where we think the pressure will be higher.”

The final three months of the year saw several areas hit the skids, led by the Queensland Outback where 3.2 per cent of mortgages were behind by over a month, a 1.12 percentage point rise during the quarter and a more than 50 per cent jump compared to September.

Eight regions in Queensland had arrears levels above 1 per cent in December 2022: Qld Outback 3.24 per cent, Toowoomba 1.64 per cent, Wide Bay 1.47 per cent, Mackay 1.42 per cent, Fitzroy 1.34 per cent, Cairns 1.09pc, Townsville 1.06pc and Darling Downs-Maranoa 1.01pc.

Areas on the fringe of Brisbane were tracking close to the 1 per cent mark, including Logan-Beaudesert at 0.97 per cent, Moreton Bay North 0.94pc, Moreton Bay South 0.88 per cent, and Ipswich at 0.85 per cent.

Allen Wargent property buyers co-founder Pete Wargent said while the arrears levels were “historically low”, owner occupiers were being hit hardest.

“Owner-occupiers had higher arrears than investors,” he said, with record low vacancy rates and rising rents “cushioning landlords-investors to some extent”.

Mr Wargent said arrears were expected to rise further in 2023 due to higher mortgage rates.

“Some of the outer-suburban and regional arrears are under pressure, as the cost of living increase tends to bite harder on mortgaged households in lower-to-middle income suburbs.”

The largest quarterly acceleration in 30-day-plus arrears was on the Gold Coast – a massive 68 per cent change compared to September levels – with 0.86 per cent of homeowners behind in repayments in December compared to 0.51 per cent in September.

The Gold Coast and Wide Bay both saw a 0.35 percentage point rise in homeowners holding more than month’s worth of mortgage arrears, rising to 0.86 per cent and 1.47 per cent respectively.

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