Interest rates, natural disasters hit borrowers
Mortgage arrears are expected to hover at historically high levels for the foreseeable future.
According to Fitch Ratings, home buyers who are 30 or more days behind on their mortgage payments will settle around 1.75 per cent for the rest of the year.
The forecast comes on the back of the Reserve Bank’s announcement that it will keep rates on hold for an extended period.
In the minutes of its July meeting, the Reserve Bank warned that arrears rates had increased among home buyers, particularly in Western Australia and Queensland, who bought houses when they were at their peak.
The Board blamed the rise on loose lending standards.
Fitch associate director James Zanesi said higher interest rates had put home buyers in difficulty.
In addition, he said the recent natural disasters have also affected borrowers.
“ While Fitch does not believe that natural disasters such as the December/January floods have been the main factor in the rise in delinquency rates in Queensland, the ratings agency cannot exclude that natural disasters might have indirectly contributed in terms of regional unemployment and increasing cost of living,” he said.