Queensland property portfolios are more profitable on average when compared with New South Wales, according to the latest Fujitsu Consulting/JPMorgan Australian Mortgage Industry Report.
The report also found that the most profitable customers, Australia-wide, are becoming more profitable for lenders and brokers, while the reverse is true of unprofitable customers.
According to the latest Australian Mortgage Industry Report, NSW has the most profitable and unprofitable customers in Australia, compared to lesser extremes of profitability/unprofitability in QLD.
The report said this can be explained in part by the fact that the average loan size in NSW is larger, reflecting higher house prices in the state.
According to the report, Loan-to-Value-Ratios in NSW has risen from 51% in 2003 to 78% in 2006, compared to Queensland, where the average LVR has risen from 46% in 2003 to 65% in 2006 – a jump of 19%, compared to 27% in New South Wales.
Fujitsu Australia and New Zealand’s managing consulting director Martin North said the growing gap between profitable and unprofitable customers is a result of higher fees offsetting interest margin reductions and higher churn in unprofitable customer groups.
“The combination of high LVRs, rising interest rates, stalling house prices in some sectors and a doubling of repossessions over the past two years in NSW indicates there are inherent risks in NSW property portfolios,” he added.
By Kathryn O’Meara
