Westpac’s latest report revealed a rise in the number of Australians who cannot keep up with their mortgage payments, mostly coming from Western Australia, South Australia, and Queensland – regions that have been affected by the mining squeeze.
According to Australia’s second largest home lender, the proportion of loans at least a month behind in repayments rose to 1.39 per cent, up from around only one per cent just nine months ago. Home loans at least 90 days behind have also jumped, suggesting that owner-occupiers are in the most financial trouble. There are also more stressed assets on Westpac’s business loans.
“Sydney and Melbourne are showing signs of increasing arrears but it’s still small,” said Velocity Trade banking analyst Brett Le Mesurier. “It’s really relating to the mining states.”
For independent economist Saul Eslake, there is even the possibility that Australia’s personal debt problem would worsen.
“It could well be that the level of bad or impaired debts continues to rise especially if income growth remains as weak as it has been in recent years,” Eslake said. “Even wealthy people have limits on how much additional debt they’re willing to take on and it could be that in recent years we’ve started to approach those levels.”
governor Glenn Stevens also touched on the problem, though he did not offer a solution.
“Gross public debt, if you add up all levels of government, is about 40 per cent of GDP,” he said. “We’re rightly concerned about the trajectory of that ratio into the future, but gross household debt is three times that size, it’s 125 per cent of GDP.”