Powered by MOMENTUM MEDIA
the adviser logo
Borrower

Over 90-day mortgage arrears hit record-high

by Reporter5 minute read
man holding miniature yellow house in palms 90 day mortgage arrears

Home loan delinquencies have increased nationwide, with mortgages more than 90 days in arrears rising to a record high, according to new data from Standard & Poor’s.

The latest data from S&P Global Ratings has revealed that delinquencies underlying Australia’s residential mortgage portfolio increased across the country in December, with over 30-day arrears increasing from 1.33 per cent to 1.38 per cent.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

Mortgages more than 90 days in arrears rose to a record high of 0.75 per cent in December, with a total of 55 per cent of all prime mortgage arrears more than 90 days overdue, up from 39 per cent five years ago.

S&P said that the spike reflected the “influence of Christmas spending and the holiday season”.

Advertisement
Advertisement

Home loan delinquencies increased nationwide, with the exception of Tasmania, where arrears fell to 1.12 per cent in December from 1.16 per cent the previous month.

The Northern Territory recorded the sharpest increase in mortgage arrears in December, which rose to 2.77 per cent, up from 2.40 per cent in November.

According to S&P, mortgage arrears continued to rise in Queensland and Western Australia and are more elevated than in other parts of the country at 1.73 per cent and 2.73 per cent, respectively.

The ratings agency noted that more than 63 per cent of the loans in arrears in Queensland are for properties in non-metropolitan areas and added that drought and flood conditions are likely to keep arrears elevated in the coming months.

Further, S&P’s data revealed that loans in arrears in Western Australia were mostly for properties in metropolitan areas, with only 14 per cent recorded in non-metropolitan areas. Over 60 per cent of all loans in arrears in Western Australia were more than 90 days overdue, up from 41 per cent five years ago.

S&P said that it expects regional RMBS mortgage arrears to remain elevated due to their higher exposure to Queensland and Western Australia.

Moreover, mortgage arrears at non-bank originators rose to 0.70 per cent in December from 0.62 per cent, which S&P said could reflect non-bank portfolios’ higher proportion of less-seasoned loans that have not had time to “build up a mortgage repayment track record”.

According to S&P, the non-bank sector’s higher exposure to less-seasoned loans could make earlier arrears categories more sensitive to interest-rate movements.

S&P concluded that it expects refinancing pressures to continue in the current environment of tightened lending conditions, which could affect borrowers with weaker credit attributes, such as those with high loan-to-value ratio loans.

[Related: Mortgage delinquencies drop despite rate rises]

Over 90-day mortgage arrears hit record-high
mortgage house
TheAdviser logo
mortgage house

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Glen Lees

Connective announces record settlement figures

Mortgage aggregator Connective has revealed that its brokers settled a record $95.5 billion across its residential,...

READ MORE
charles grover outfund ta zgvq5o

New SME lender launches into broker channel

A new fintech lender, Outfund, is ramping up for growth through the broker channel after having completed a capital...

READ MORE
david bailey afg ta l8ozkr

AFG’s bottom line hit by Volt closure

The ASX-listed company, Australian Finance Group Ltd (ASX: AFG) has confirmed it is set to deliver “strong...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more