Australians falling behind on their home loans
More Australians are behind on their mortgage repayments due to slow wage growth and seasonal spending.
New data from Fitch Ratings shows mortgage arrears increased in the March quarter, the Australian has reported. Arrears rose from 0.95% in the December quarter to 1.11%. Fitch put the rise down to seasonal Christmas spending, a rise in standard variable rates and low real wage growth.
“We expect arrears to fall over the next two quarters once the effect of Christmas spending fades and the May 2016 interest rate cut starts benefiting borrowers,” Fitch said.
Fitch had previously predicted at the release of its December quarter arrears figures that the number of Australians behind on their mortgages could rise as property prices moderated.
In spite of the rise, arrears are below their March 2011 peak of 1.75%, the Australian said. The result sees March quarter arrears at their lowest since prior to the GFC.
Fitch warned that a rise in unemployment or fall in real wages would pose a major threat to Australian banks, the Australian reported. The ratings agency said low interest rates and rising house prices were currently keeping loan losses low, and that the tighter lending standards currently in place could provide stability if economic conditions worsened.