Low rates fail to stave off late mortgage payments
Mortgage delinquencies are on the way up in spite of low interest rates.
Record low rates don’t seem to have helped mortgage holders from feeling the pinch, as the number of Australians behind on their mortgage payments has hit its highest level in three years. A new report from credit ratings agency Moody’s shows the proportion of borrowers more than 30 days behind on their mortgage payments hit 1.5%.
The findings echoed a report by rival ratings agency, Fitch, which found arrears rose in the June quarter. Though the proportion of borrowers behind on their payments remains low, Moody’s said this number was expected to rise as home loan debt grew faster than incomes and the labour market softened.
Moody’s said mining-dependent regions were particularly at risk. Western Australia had the highest rate of mortgage arrears in the country, at 2.33%. Arrears in the state, along with the Northern Territory and Tasmania, are at their highest level since Moody’s began recording arrears in 2005.
“The increase raises the risk of mortgage defaults. The regions and postcodes exposed to the resource and mining sectors dominates the list of areas with the highest mortgage delinquencies,” Moody’s vice president Alena Chen said.
By contrast, pockets of inner Sydney and Melbourne had the lowest proportion of borrowers behind on their mortgages. Sydney’s Northern Beaches recorded the lowest rate of arrears in the country.