Invest
Mortgage arrears up in all states and territories
The growing number of arrears across the country reflects households struggling with incremental interest rate hikes and sluggish wage growth, S&P has revealed.
Mortgage arrears up in all states and territories
The growing number of arrears across the country reflects households struggling with incremental interest rate hikes and sluggish wage growth, S&P has revealed.
According to the latest Standard & Poor's Performance Index (SPIN), Australian prime mortgages in arrears jumped from 1.07 per cent in December 2017 to 1.30 per cent in January 2018.
While January often marks an increase in arrears, courtesy of higher December spending, S&P noted the sheer magnitude of the month-on-month increase.
“While improving employment conditions have helped to keep overall mortgage defaults low, high household indebtedness is making borrowers more sensitive to interest rate movements and changes in their economic circumstances,” S&P said.
“We believe the impact of incremental increases in interest rates during 2017 could be a contributing factor to the rise in mortgage arrears in January.”
Continuing, the ratings agency said only time will tell whether more mortgages shift into higher degrees of arrears due to affordability constraints, or are cured.
Western Australia retained the dubious title of the state with the most mortgages in arrears, while loans in arrears of more than 30 days jumped from 2.08 per cent in December to 2.44 per cent in January, marking a new high.
Those most likely to slip into arrears are households nearing the end of their interest-only period on their loans, given the looser lending standards for interest-only loans prior to 2015. As such, these households could be more vulnerable to repayment pain when they shift into a principle and interest structure.
Joining them, those with high loan-to-value ratios (LVRs) are at increased risk of loss should the borrower default, given the lower level of equity. Additionally, borrowers with high LVRs are more likely to have difficulty in refinancing their loan with another lender.
Like those with high LVRs, loans with high debt relative to income are also at higher risk.
S&P explained that these borrowers have less of a buffer to cover their mortgage if they fell into rate hike-induced financial stress.
“The integrity of debt-serviceability standards is important in ensuring that debt-to-income serviceability assessments reflect each borrower's actual income and expenditure patterns,” S&P said.
Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more
Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more
Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more
Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more
Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more
Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
Property
RBA’s 30% property growth forecast to materialise in 75% of regions
Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions. ...Read more
Property
HomeBuilder applications soar as first-timers enter the market in record numbers
Record numbers of first home buyers are coming into the market assisted by the government’s HomeBuilder stimulus, which is expected to help spur $50 billion in economic activity. ...Read more
Property
Dual Occupancy Homes – Why They Are A Smart Investment In The Current Market
Promoted by Metricon ...Read more
Property
4 factors affecting property market trends in 2021
Following a tough 2020, property investment activity is expected to rebound strong, expanding by 50 per cent in the second half of 2021. ...Read more
Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more
Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more
Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more
Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
