Home News Standard & Poor: Apartment oversupply could heighten mortgage risks

Standard & Poor: Apartment oversupply could heighten mortgage risks

Font size :
Credit ratings agency Standard & Poor’s highlighted concerns regarding apartment construction boom in Melbourne and Brisbane and how it can affect inner-city prices and settlement risks caused by tougher bank lending rules. However, S&P said that it did not expect an increase in home loan defaults.

“There is growing concern over the large volume of new unit stock coming onto the market, in addition to the already-existing supply, particularly in inner-city postcodes. This is more pronounced in Melbourne and Brisbane,” the S&P report said.

According to Reserve Bank figures, there is a slowdown in housing credit growth in the year to April due to weaker growth in investor lending. Tighter property lending regulations have required bigger deposits from investors, raising settlement risks, especially for off-the-plan buyers.

“This is of particular concern for off-the-plan developments, which have a lag between the contract being signed and final settlement,” S&P said. “Property prices could be affected, particularly if new units coming up for settlement are in competition with existing supply.”

Although the Reserve Bank said that there was potential for banks to make large losses from soured loans to property developers due to looming apartment glut, the latest round of financial results showed low levels of mortgage stress.

S&P’s report also said that the proportion of mortgage borrowers behind on their repayments has drifted higher for the past five months, especially in mining states like Western Australia and Queensland. But since the jobs market in these areas was “relatively stable,” the credit ratings agency does not expect higher arrears to translate to a mortgage default rise.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Sunday, Jul 23, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords