Stable rates help to decrease arrears
By
Adam Smith
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22/09/2011 5:15:00 AM
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Mortgage arrears have declined slightly as households have begun to see benefits from a long period of stable rates.
The Fitch Ratings Quarterly Australian Mortgage Performance Report has indicated Australians are managing their mortgage payments better, with delinquencies decreasing 10bps to 1.69%. The ratings agency said a drop in 30-89 day arrears drove the result, while 90-plus day delinquencies climbed slightly to 0.66% from 0.65% in the previous quarter.
Fitch said the RBA's decision to leave the cash rate on hold since its November hike last year has seen arrears stabilise over the quarter after climbing to a record high in the first quarter of 2011.
"As interest rates have remained stable, this stabilisation of arrears is expected to continue into quarter three 2011," the Fitch report said.
In spite of optimism over the state of arrears, Fitch expressed concern that household living costs have increased beyond the level of inflation over the past year.
"Fitch continues to believe that the increasing cost of living, together with potentially higher levels of mortgage rates, is a major threat to the performance of the mortgage market in the long term," the report said.
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