Aug 21 - Link to Fitch Ratings' Report: Australian Mortgage Delinquency by Postcode - 31 March 2012Aug 21 - Fitch Ratings has said, in its latest update of Australian mortgage performance, that Queensland (QLD) is still the worst-performing Australian state with 30+days arrears rising to 1.86% at end March 2012, from 1.70% six months earlier. The delinquency rate in QLD is above the average 1.60% delinquency rate across Australia, up 18bp from 1.42% in September 2011. The regions located south of Brisbane (Ipswich, Logan and the Gold Coast) are among the worst-performing regions in Australia; however, delinquency rates in Brisbane are relatively low and below the national average. While arrears in QLD have not shown signs of stabilising, Western Australia (WA) continues to show a more discernible improvement in mortgage performance than the rest of the country. "Arrears in WA have improved above average and increased less than other states, exhibiting an overall positive trend. The improvement was particularly noteworthy in the 90+ days bucket in regional WA, where the arrears had built up due to a stagnating housing market, indicating an increasing clearance rate for secured properties of delinquent loans" says James Zanesi, Director in Fitch's Structure Finance team. "WA has benefitted from the rebound in the mining sector, the local economy, and housing market, as well as low unemployment", added Mr. Zanesi The delinquency rate in WA worsened only marginally to 1.59% in March 2012, from 1.50% six months before. No region in WA was among the top 10 worst-performing regions. Delinquencies in South West WA, which was the eighth worst-performing Australian region in September 2011, dropped 32bp to 1.85% as of March 2012. Central Metropolitan Perth also experienced a significant improvement in delinquency levels and it was the fifth best-performing region in Australia as of March 2012. Nevertheless, Fitch expects Australian mortgage performance to improve in Q312 following the Reserve Bank of Australia's decision to further reduce the cash rate by 50bp in May 2012 and 25bp in June 2012. Interest rate movements are reflected in mortgage performance with a three- to four-month lag. Regions in which serviceability is key to mortgage performance, such as New South Wales (NSW), are expected to benefit the most. As of March 2012, Fairfield-Liverpool (NSW) was still the worst-performing region in Australia, with 30+ day delinquencies at 2.82%, compared to 2.63% in September 2011. This region and others in southwest and western Sydney (e.g. Outer South West Sydney) continued to exhibit higher rates of delinquencies than the rest of NSW. Above-average delinquency rates in these regions can be attributed to socio-economic variables which increase sensitivity to interest rates movements, as well as to changes in the cost of living, or Christmas spending. This is also reflected at the postcode level, with 11 of the 20 worst-performing postcodes being located in NSW, seven of which are around Sydney, predominantly in southwest and western Sydney. Nelson Bay (NSW), which is located in the Hunter region, continued to be the worst-performing postcode by value of mortgages in arrears, with a 30+ day delinquency rate of 7.8% as of March 2012. As mentioned in previous reports, the high level of arrears follows the stagnation in the local housing market, which leads to an accumulation of arrears in the 90+ day bucket. Budgewoi (NSW), which is located on the Central Coast, was the worst-performing suburb by number of mortgages in arrears, with 33 borrowers out of 1,000 in delinquency as of March 2012. The report, "Australian Mortgage Delinquency by Postcode - 31 March 2012", analyses the performance of the local residential mortgage market using data covering around 15% of all mortgages in Australia (over 1 million loans), as of March 2012, with a total outstanding balance of over AUD182bn. The report is available on www.fitchratings.com or by clicking on the link above. Additional information is available at www.fitchratings.com.