More Australians behind on mortgage payments
Underemployment may be behind a rise in the number of Australians behind on their mortgage payments.
Fitch Ratings’ Dinkum RMBS Index has found mortgage arrears rose to 1.14% over the June quarter, the ABC has reported. The rise came as a shock, Fitch said, given rising house prices, low interest rates, wager growth and a strong economic environment.
Analysts for Fitch put the rise down to high underemployment, in spite of a fall in the unemployment rate from 5.8% to 5.6%.
Fitch said the rise was largely driven by loans between 30 and 60 days in arrears shifting to 90 or more days in arrears.
"Historically, arrears that materialise in the first quarter are due to seasonal spending and tend to cure themselves in the next quarter. However, recent data indicates households that had financial difficulties in the March quarter also had them in June quarter,” the ratings agency said.
While Fitch said low interest rates had not significantly helped arrears in the June quarter, the agency said the effect of rate cuts may have been delayed, the ABC reported. The agency said households could begin to feel the positive effects of rate cuts in the next quarter.
“The August rate cut may also improve second quarter arrears,” Fitch said.