Borrowers will have to pay more mortgage payments.

According to a Moody’s Investors Service Report, more borrowers will have deferred mortgage payments at the end of the year.

In the six months ended May 2021, there was an increase mortgage delinquencies. The economic effects of the coronavirus revival are expected to cause this trend to continue into the new Year.

This was 1.61% compared to 1.4% in November 2020.

In all states, territories and capital cities, the rates of delinquency increased, as well as in most other state regions.

At 2.35%, Western Australia had the highest number of delinquent loans in this time period. Next came the Northern Territory (2.17%)

Only the Rest of South Australia, Western Australia and Western Australia saw a decrease in mortgage arrears.

Alena Chen (Vice President of Moody’s Investors Service) and senior credit officer stated that delinquencies rates would rise in the rest of the year due to restrictions that were placed after the Delta variant Moody’s Investors Service was introduced in Victoria and New South Wales.

She stated that “the extremely contagious Delta coronavirus virus strain has been affecting the economic activity since June” as well as the associated social restrictions for NSW and Victoria that had hampered growth through the third quarter.

Although Victoria and NSW are nearing their reopening vaccination rates, Ms Chen said that there was still a possibility of a slight rise in mortgage arrears.

Divergence between States & Territories

Ms. Chen claimed that uneven economic recovery in states, as well as different paths out of coronavirus restrictions will lead to further divergence among delinquency rate.

Victoria was the hardest hit, as shown by its economic contraction in the year up to June

“For other states, this year’s coronavirus outbreaks have been small in comparison with NSW and Victoria and there have been fewer restrictions and economic disruptions,” she said.

“Lagging vaccine rates and, where appropriate, prudent approaches to removing state boundaries restrictions will likely delay economic opening beyond what is provided by NSW and Victoria.”

“Each states’ success on their pathway out of coronavirus restrictions will influence the pace of economic recovery over the next year and the outlook for mortgage delinquencies in different regions.”

Five of the ten areas with the lowest mortgage arrears percent were in NSW. The rate at 0.56% was found in Sydney’s Northern Beaches.

However, five of the 10 areas with the worst performance were in Western Australia.

Interestingly, one Victorian region — Melbourne – North West — joined the list, with a delinquency rate of 2.39%.

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