More homeowners fall behind on repayments

Home loan arrears of 90 days or more past due rose significantly in the December 2010 quarter and may increase further if the property market becomes stagnant, said Fitch, in its report on Australian mortgage arrears for the quarter. Arrears over 90 days rose to 0.54 per cent in Q4, compared with 0.48 per cent in Q3. Much of this was reflected in the 30-plus day delinquencies, which rose to 1.37 per cent, from 1.30 per cent.

According to the ratings agency, the rise was unexpected because no particular event had been expected to affect mortgage performance in Q4. Separate data from Standard & Poors also showed a rise in 90-plus day arrears, to 0.56 per cent in December, from 0.53 per cent in November. Fitch said the rise in 90-plus day delinquencies coincided with an increase in claims on lenders mortgage insurance, which rose 32 per cent over the previous quarter to A$4.1 million.

While a rise in claims indicates more properties are being sold, if the housing market turns stagnant such sales could decrease and thus push up 90-plus day arrears. Delinquencies over 90 days also rose in the low-doc segment, increasing to 3.03 per cent from 2.79 per cent, to touch the highest level since July 2009. S&P data showed such delinquencies rising to 2.27 per cent in December, from 2.13 per cent in November and 1.99 per cent in October.

Source: Banking Day