Australian mortgage arrears, already low relative to other nations, will remain stable in 2013, helped by record-low interest rates and steady employment, Fitch Ratings said.
The proportion of prime home loans between 30 and 59 days late was at 0.59 percent, the lowest post-Christmas level since March 2006, the ratings company said in a statement today. Mortgages more than 30 days late rose to 1.48 percent in the first three months of 2013 from 1.46 percent in the fourth quarter of 2012, it said.
Australia’s “macroeconomic environment will continue to remain stable in 2013 due to low levels of unemployment and strong gross domestic product,” analysts led by Hai Duong Le in Sydney wrote in the report. “Low interest rates will continue to assist borrowers’ serviceability and ease the debt burden.”
The Reserve Bank of Australia lowered borrowing costs by 2 percentage points since November 2011 to 2.75 percent, and the unemployment rate fell to 5.5 percent in May from 5.6 percent in April. Almost half of all borrowers surveyed by QBE Insurance Group Ltd.’s lenders’ mortgage insurance unit were able to get ahead on repayments last year, thanks to the central bank’s rate cuts, the company said this week.
Self-employed borrowers are lagging others, with delinquencies rising to 7.57 percent in the quarter ending March 31 from 7.05 percent in the prior three months.
Those with low documentation “have taken longer to adjust their spending and cure arrears due to the lumpy nature of the cash flows,” Fitch said. “Fitch believes this will continue.”