RESIDENTIAL PROPERTY

Mortgage arrears decline

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LOCKDOWN loan deferrals had little impact on Australia’s 30-plus days mortgage arrears, which fell in line with the last decade’s third quarter decline.

According to Fitch Ratings’ latest Dinkum RMBS Index report, Australia’s 30-plus days mortgage arrears fell by 13 basis points to 1.02% quarter-on-quarter in the third quarter of 2021, consistent with the seasonal fall for the quarter reported for the last 10 years.

This means that loan deferrals issued as a result of extended lockdowns across Sydney and Melbourne has no effect on arrears.

This lack of impact can be attributed to a much lower take-up than witnessed in 2020, with lenders’ criteria for accessing the programme being tighter, with loan deferrals peaking at 7.9% last year during COVID-19 related lockdowns, while in 2021 they averaged at just 0.6%.

This is in line with what was forecast in September due largely low unemployment levels and interest rates, after it was reported that 30-plus days mortgage arrears for the June quarter rose by 9 basis points to 1.4%.

The report also noted that Australia’s house prices are were still on the up throughout the third quarter, though at a slower rate than experienced in the second quarter of the year.

Across the country’s eight capital cities there was an increase of 4.7% recorded over the quarter, or 19.5% year-over-year.

According to Fitch, prices are anticipated to continue climbing for the remainder of the year and into 2022, albeit at a slower rate as a consequence of decreasing housing affordability.

Losses from the sale of collateral property are also expected to remain low, as a result of the recovering economy and strong home-price growth.

With conditional prepayment rates for non-bank transactions sitting elevated when compared to those issued by banks, at 32.9%. Fitch attributed this discrepancy to borrowers refinancing at lower fixed-interest rates.