WA home loan arrears twice of national rate: CBA
Western Australia has the most problem home loans in Australia for the country’s largest mortgage lender, the Commonwealth Bank of Australia.
While home loans in WA only account for 16 per cent of the total for the bank, the proportion of loans that are 90 days or more behind in repayments jumped by a quarter from close to 1 per cent in December, the bank's results for the year to June showed.
WA has a 1.23 per cent arrears rate in home loans, twice the national average, reported The Australian Financial Review.
The state’s housing market is still feeling the shocks from the end of the mining boom. Perth house prices fell 1.8 per cent to a near-five-year low of $555,788 in the June quarter even as unit prices rose 1.1 per cent to $377,823, data from Domain show.
CBA had a 25.2 per cent share of the country's total home loan market as of June.
Though the bank reported a better-than-expected $9.9 billion profit for the year to June its retail banking expenses rose 5 per cent to $699 million, mainly due to sluggish conditions in the largest two resource-dependent states.
Expenses rose in that category "as a result of higher arrears and losses for home loans and consumer finance, predominantly in WA and Queensland", the bank said.
CBA’s total home loan balance rose 7 per cent from a year earlier to $485.9 billion driven by strong growth in retail banking, New Zealand and its Bankwest unit, it said.
At the same time, the bank’s exposure to Sydney’s apartment market has grown. While apartment developments accounted for 36 per cent of its total $12.3 billion residential book, Sydney made up 61 per cent – or $2.8 billion – of that.
The bank’s exposure to the Melbourne apartment market was $900 million, while Brisbane at $300 million and Perth with $200 million were way behind.
"Weighting to Sydney [is] increasing as exposures to other capital cities reducing proportionally quicker," the bank said.
Over the six months to June, CBA reduced the value of its apartment development exposure by $700 million, or 14 per cent, to $4.5 billion.
The bank said it had a "lower" portfolio loan-to-value ratio of 59 per cent.
