Garry Shilson-Josling, AAP Economist
(Australian Associated Press)
The percentage of home loans in arrears has fallen to an 11-year low, according to ratings agency Fitch.
Just 0.91 per cent of loans in what Fitch calls the Dinkum RRMBS (residential mortgage-backed security) index had payments overdue by more than 30 days in September.
The arrears rate was only two thirds of the 1.37 per cent average of the past decade and the lowest since late 2004.
And it was not much above the record low for the 14 year span of Fitch’s data, 0.67 per cent recorded in November 2002.
Fitch’s report said the low arrears rates are near their lower limit thanks to the combination of a strong property market and historically low interest rates.
“At present, delinquency may be due to factors outside the economy (eg divorce, illness, extraordinary expenses),” Fitch said.
And there are plenty of reasons it might eventually worsen.
“A slowdown in property price growth, rising interest rates and rising unemployment could all contribute to future deterioration of the index,” Fitch said.
In its Financial Stability Review in October, the Reserve Bank of Australia said arrears rates had drifted up towards the middle of the year, according to information it had received from banks.
The Fitch figures suggest the upward trend has been arrested, at least for the time being.