The rate of defaults and arrears on Australian mortgages stabilised last quarter, according to new research.
Based on Moody’s Investors Service, clean credit home loan defaults greater than 30 days remain steady at 1.39 per cent, compared to 1.34 per cent in Q1 2010.
Non-conforming mortgage defaults and arrears over 30 days grew a little to 13.74 per cent in June from 13.02 per cent in March.
“Borrowers in outer south-western Sydney and Fairfield-Liverpool are experiencing greater mortgage stress as compared to other regions. These two regions feature the highest proportion of home loan arrears and defaults, with 2.5 per cent to 3 per cent of mortgages falling into arrears of 30 plus days past due,” Moody’s senior analyst for the structured finance group Arthur Karabatsos said.
“If interest rates hold, there is no reason to expect great pressure on mortgage arrears. If they were to increase beyond these ‘neutral’ levels — that is, neither stimulating nor constraining the economy — delinquencies may rise, although we don’t expect to witness the 1.63 per cent seen in January 2009.