Regional cities show home loan stress 25 September 2009 4:48PM Ian Rogers Arrears on home loans have improved in recent months after rising over late 2008 and early 2009, with the improvement mainly due to the cuts in interest rates as well as the cash handouts from the Australian government.But pockets of localised problems remain for lenders, with several new suburbs and regions featuring in a list published yesterday by the Reserve Bank of Australia.A chart of the 15 regions with the highest incidence of home loans 90 days or more in arrears, published by the RBA in the Financial Stability Review, shows several new, and prominent, entrants from the last time this newsletter reported similar data.The top trouble spot is "regional Illawarra", and so beyond the classic boundaries of the city of Wollongong, and perhaps including the growth area around Shellharbour on the city's south side.The next three are the long-standing stress arrears hotspots of Blacktown, Fairfield-Liverpool and Greater Western Sydney, all regions where the mis-selling of home loans, often through brokers, during the 2003 and 2004 boom, produced a sharp rise and then fall in property prices.Next in the rankings are "Hastings ex Port Macquarie" and which probably includes the growth suburbs of that coastal city, followed by Gosford-Wyong on the central coast and within the Sydney commuter belt, and then Newcastle.All the other localities in the RBA's list of 15 troubled regions are regional centres that experienced abundant urban growth over the later stages of the boom and where, presumably, local property price trends are sufficiently adverse that the owners who cannot repay their mortgages also cannot sell their homes.