The proportion of delinquent borrowers was 50 per cent higher in September than it was 10 months ago, according to data released today.
The increase in delinquencies on a national basis revealed in the Fitch Rating’s six monthly report into Australian mortgage delinquency coincided with the increase in borrowing costs and the onset of the global financial crisis, Ben McCarthy, head of structured finance at Fitch Ratings said.
The Australian 30+ day mortgage delinquency rate increased to 2.13 per cent from the 1.88 per cent tabled six months prior.
The figure was also up on the 1.56 per cent registered a year earlier.
The 90+ day delinquency rate increased to 0.97 per cent from 0.73 per cent six months and 0.68 per cent a year prior.
Recent cuts to the RBA cash rate have not effected the delinquency rate to 30 September; the benefit of these interest rate reductions will not be revealed until the March 2009 period report.
According to Mr McCarthy, delinquencies over the period to 30 September were exacerbated by the global financial crisis, which limited the ability of distressed borrowers to refinance – forcing them to either meet mortgage commitments repayments or default.
In the short- to medium-term Fitch expects the delinquency rate to continue to rise.
“While dramatically falling interest rates and the federal government stimulus package will assist borrowers, the onset of the Christmas spending season – which traditionally lifts delinquencies – coupled with a rapidly slowing Australian economy and the resultant rise in employment, are expected to cause significant stress in the mortgage market,” Mr McCarthy said.
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