More borrowers are falling behind on their home loan payments in mining towns, as resources hot-spots feel the pain of plunging commodity prices, Standard & Poor’s says.
“The fall in iron ore prices during the past 12 months has coincided with a rise in arrears in mining areas,” a report from the credit ratings agency said.
“This is not surprising, given that mining areas are highly dependent on a few key employers and the flow-on effects of a downturn in a key industry are more pronounced in such areas.”
The following chart from S&P shows that arrears rates in mining-heavy areas had risen from about 1.5 per cent to 2 per cent in the past year, as the iron ore price has tumbled.
The areas, which include the Pilbara, Kalgoorlie, Mount Isa, Hunter Valley and Broken Hill, accounted for about 1.7 per cent of the loans used in S&P’s data set of residential mortgage bonds.
Next stop Perth.