Mortgage repayments improve in Australia

By Gerv Tacadena

Mortgage repayments are improving in Australia except in Tasmania, where arrears levels went higher in October.

There seem to be fewer Australians falling behind on their mortgage repayments.

According to a report from Business Insider Australia, Standard and Poor’s (S&P) study revealed that the housing loans contained in Australian prime residential mortgage-backed securities continued to decline from the levels reported earlier in the year, falling to 1.04% in October. This is a further improvement from the 1.29% in January.

The arrears levels declined in most states, with the Australian Capital Territory recording the lowest level at 0.58%. New South Wales recorded the second-lowest level in the country, with arrears falling to 0.75%. In Victoria, the level declined slightly to 0.94%.

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Repayments improved in the Northern Territory, where arrears declined from 1.7% to 1.57% –  this trend was also apparent in Australia's mining states and territories, with Queensland and Western Australia reporting a decline in arrears to 1.39% and 2.12%, respectively.

“Queensland and Western Australia, where arrears have been more elevated for some time, recorded another month-on-month decline in mortgage delinquencies,” S&P said.

Tasmania was the only state to reflect an increase in arrears at 0.89%.

The ratings agency said the non-conforming mortgage sector arrears reached a near-historic low of 3.99%.

While improving employment conditions and the low-interest rate conditions have helped keep mortgage arrears low, S&P said there are still risks facing Australians.

“Australia’s high household indebtedness, which has outpaced income and GDP growth for some time, leaves borrowers vulnerable to a change in economic circumstances. We do not expect arrears to increase much above current levels while these relatively benign economic conditions persist," the agency said

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