MOODY'S: Here Are The Australian Suburbs That Are Most Likely To Have Mortgage Defaults In A Recession

Ratings agency Moody’s has published a new report linking occupation and education levels in various Australian regions to the likelihood of mortgage defaults during an economic downturn.

Moody’s analysts Dylan Bourke and Jennifer Wu studied the Australia Bureau of Statistics’ 2011 Index of Education and Occupation (IEO) data alongside data from 2006, which they said correctly ranked regions’ default rates in the wake of the global financial crisis.

According to their analysis, the top 5 most disadvantaged regions were: the two Queensland regions of Wide Bay-Burnett and West Moreton; Ipswich City in Brisbane; Fairfield-Liverpool in Sydney; and the Mackay-Fitzroy-Central West region in Queensland.

The percentage of households that were more than 30 days behind on their mortgage repayments ranged from 1.33% to 3.03% in those regions in 2013, and 1.6% to 3.15% in 2011, following the global financial crisis.

Delinquency rates in the five most advantaged regions of Australia – Inner Melbourne, Lower Northern Sydney, Brisbane City Inner Ring, Sydney Eastern Suburbs and Sydney Northern Beaches – averaged 1.58%, significantly below the national average of 1.89%.

From the report (click to enlarge):

Bourke and Wu explained that jobs in disadvantaged regions – those with low IEO ratings – tended to be less stable during a recession because of the higher concentration of roles like machinery operator, driver and labourer, which were more likely to be cut.

Professionals and managers – classified as “advantaged occupations” – were more likely to keep their jobs during a recession, and more likely to find a replacement job even if they were made redundant, Moody’s reported.

Earlier this year, Fitch Ratings named NSW’s Nelson Bay as the worst region for mortgage defaults because of the stagnant housing market and high mortgage values in the area.

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