Fewer Aussies behind on mortgages, but delinquencies could rise
Fewer Australians are falling behind on their mortgage payments, but that number could rise over 2016.
Mortgage arrears have remained near record lows amidst low rates and strong house price growth, a new report has claimed.
The Fitch Dinkum Index has shown mortgage delinquencies falling 0.2% over the year, to a near-record low of 0.95% in the December quarter. The result represents the lowest fourth quarter level for arrears in 11 years.
Fitch Ratings said the level of arrears reflected strong house price growth, low unemployment, low mortgage interest rates and low inflation.
Mortgage delinquencies among self-employed borrowers were up, however, rising 0.32% to 7.29%. Fitch said the rise came in spite of positive serviceability factors.
While arrears remain low, the ratings agency said it expected a rise in delinquencies over 2016 as property prices moderate.
“Losses are likely to remain limited, despite the likely slowdown in property price growth, because of tighter serviceability assessments recommended by the Australian Prudential Regulation Authority and the Australian Securities & Investments Commission. The introduction of measures, such as interest-rate floors, means borrowers should have more buffers to withstand increases in interest rates and unemployment, and a slowdown in the housing market,” Fitch said in a statement.
The sentiment echoes forecasts from ratings agency Moody’s, which predicted below-trend economic growth and slowing house price appreciation could lead to a rise in mortgage delinquencies over the year.