Total mortgage values rise in February

Seasonally adjusted figures also reflected growth in housing loans of 1.3 per cent, from $21.21 billion to $21.49 billion.

The total value of commercial loans also increased in trend terms, rising by 0.2 per cent from $42.88 billion to $42.98 billion in the same period.

However, the ABS reported a 2.1 per cent fall in the total value of commercial loans when seasonally adjusted, from $42.94 billion to $4.02 billion.

Further, the overall value of personal loans dropped, falling by 0.1 per cent to $6.28 billion in trend terms or holding firm on seasonally adjusted estimates at just under $6.32 billion.

In trend terms, revolving credit commitments fell by 18.7 per cent, while fixed lending commitments increased by 3.4 per cent.

Seasonally adjusted, revolving loan commitments jumped by 3.7 per cent, while fixed lending commitments dropped by 2.2 per cent.

Lease finance also declined, with the total value of such loans falling by 1.1 per cent from $555 million in January to $550 million in February. The total value of lease finance declined by 2.6 per cent when seasonally adjusted, from $550 million to $536 million.

Mortgage arrears drop nationwide

Australian home loan arrears dropped by 14 basis points in February, after a 16 basis point rise in January, according to the RMBS Arrears Statistics: Australia report from Standard and Poor’s (S&P).

Mortgage arrears fell from 1.30 per cent in January to 1.16 per cent in February.

The ratings agency’s analysis revealed that delinquencies dropped in all states and territories, driven by a decline in total loans outstanding.

S&P attributed the fall to stronger jobs growth across the country, making particular reference to improvements in the resource states of Queensland and Western Australia. Queensland experienced a year-on-year improvement of 12 basis points (from 1.65 per cent to 1.53 per cent), while arrears dropped by 5 basis points in Western Australia, from 2.32 per cent to 2.27 per cent in the same period.

“Improving conditions in the broader economy are helping to stem the flow of new loans moving into arrears, as evidenced by the more pronounced improvements in the earlier arrears categories,” the S&P report noted.

However, the ratings agency reported that loans in the most severe arrears categories are not improving.

According to S&P, loans more than 90 days in arrears reached 0.66 per cent in February, 14 basis points above the 10-year average of 0.52 per cent.

Further, the report noted that more than half of loans in arrears over 90 days are in Queensland and Western Australia, brought about by slow property price growth. S&P claimed that such arrears are unlikely to “cure”, as a result of sluggish wage growth and the prospect of future interest rate rises.

It added that the ability of borrowers to manage the pressures of such conditions is dependent upon their loan-to-value ratio (LVR) position and their refinancing prospects.

However, S&P said that it was confident that borrowers would absorb future interest rate hikes.    

“Future interest-rate rises will no doubt put pressure on some borrowers, given Australia’s high indebtedness.

“But we believe most borrowers across Australian RMBS portfolios should be able to absorb a gradual rise in interest rates and continue to pay down their mortgage, provided jobs growth continues and economic conditions remain relatively benign.”