Western Sydney leads in mortgage arrears
There are 17,000 households in Australia that are 90 days or more in arrears on their mortgage repayments, up 2,000 since the beginning of the year. That is about 0.4 per cent of all mortgage loans, or double the rate of three years ago, but still well below the rate of arrears in the USA and Britain. The number of mortgages in arrears by more than 90 days in the western suburbs of Sydney is three times the national average according to the Reserve Bank of Australia. “As property prices in Sydney began increasing rapidly, many borrowers turned to lenders that allowed higher maximum loan-to-valuation ratios or higher permissible debt-servicing ratios in order for them to borrow larger amounts,” the Reserve Bank's Financial Stability Review report says. “For many, the increased risk involved in such loans was perhaps perceived to be mitigated by the prospect of further house price growth.” The RBA expressed some concern about mortgage broker lending practices and said loans begun in 2004, when the property ‘bubble' burst in western Sydney where the most likely to become problem loans. Fairfield-Liverpool is the number one region in Australia for mortgage arrears, with all the top 6 regions located in the western suburbs of Sydney.
Source: Sydney Morning Herald