Australian Loan Arrears Fall as Floods, Christmas Effects Pass
Australian home-loan delinquencies fell in the second quarter as borrowers adjusted to the effects of higher interest rates, natural disasters and increased spending at Christmas, Fitch Ratings said.
Mortgages more than 30 days overdue fell to 1.69 percent in June from a record 1.79 percent in March, according to the London-based ratings firm’s Australian residential mortgage performance index. Loans more than 60 days late fell to 0.31 percent from 0.34 percent in March.
“The decision by the Reserve Bank of Australia to leave the current level of cash rates at 4.75 percent over the last nine months has contributed to the stabilization of arrears,” James Zanesi, associate director for structured finance at Fitch, wrote in the statement. “Mortgage performance is expected to stabilize in the third quarter as the effect of Christmas spending continues to pass through and borrowers affected by natural disasters in the first quarter receive financial support.”
Australian consumer confidence rebounded in September from a two-year low as the central bank indicated it will keep rates on hold to gauge fallout from Europe’s debt crisis. The nation’s gross domestic product expanded 1.2 percent last quarter, the fastest pace in four years, driven by a recovery from natural disasters in the nation’s northeast at the start of the year.
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