COVID-19 restrictions reveal top 10 list of mortgage deferral hotspots
The impact of COVID-19 lockdown restrictions on Australia’s tourism sector has hit Queensland the hardest, with the state recording nine of the top 10 for mortgage deferral hotspots.
An analysis by global information solutions company Equifax revealed that when COVID-19’s first wave hit Australian shores, residents living in regions with tourism-dependant economies struggled to maintain consistent mortgage payments as a result forced lockdowns and social distancing restrictions.
The Equifax deferral analysis was conducted in September 2020 based on credit history and repayment information available for the month of May 2020.
Among the Australian regions with a higher proportion of deferrals compared to the national average were Noosa, Surfers Paradise, Coolangatta, Mudgeeraba-Tallebudgera, Broadbeach-Burleigh, Southport and the Gold Coast Hinterland.
Equifax General Manager Advisory and Solutions Kevin James said the analysis was an important insight into mortgage affordability and borrower behaviour, and highlights the first indications of the impact of COVID-19 lockdowns on the ability of Australians to continue to meet their mortgage repayments.
“The impact of the downturn on tourist trade is acute for Australians living in tourism-dependent Queensland regions”, Mr James said.
“Tourism is a major industry for Queensland, and with international and domestic visitors curtailed during the pandemic, tourist hotspots have faced reduced occupancy rates, lower incomes and higher levels of unemployment leaving mortgage holders feeling the pinch.
“With the Queensland border beginning to reopen to parts of NSW and SA this week, we expect to see a bounce back as tourism dollars start to flow back into the region.”
Melbourne suburbs heating up
Victoria’s region of Tullamarine-Broadmeadows, on the outskirts of Melbourne, was the only non-Queensland location to make it onto the top-ten list of mortgage deferral hotspots.
However, a melting pot of circumstances, including lower socio-economic suburbs, low-income households and increasing rates of young people just starting out on the property ladder, indicated heightened mortgage stress across Melbourne’s fringe suburbs.
In May 2020, when data was available for Equifax’s analysis, Wyndham, Casey-South, Whittlesea-Wallan, Melton-Bacchus Marsh and Boroondara had a high number of mortgage deferrals compared to the national average.
“COVID-19 is having a particularly negative effect on the employment of young people,” Mr James said.
“For those without significant savings, it isn’t easy to service a home loan when cash flow dries up.
“We know Melbourne’s second lockdown will have further exacerbated the difficulties we’ve seen in our initial analysis on the available May data,” he said.
Middle-aged Australians more likely to struggle
Australians aged 36 to 45 were most likely to defer their mortgage repayments during COVID-19, according to Equifax’s analysis.
“This group is likely to have relatively high outstanding mortgage balances and may have been harder hit with business lay-offs or lower income from JobKeeper payments,” Mr James said,
People aged 26 to 35 accounted for the second-largest number of mortgages deferred as a proportion.
The age group with the least deferrals is the 56 to 65-year-olds. 66+ also have higher levels of deferrals which is likely a reflection of deferral of investment property loans.