This article is from the Australian Property Journal archive
THE number of households struggling to meet their mortgage repayments has continued to rise.
Standard & Poor’s Rating Services shows the proportion of late-paying borrowers has increased to 1.48% in February from 1.39% in January, and 1.25% in December.
S&P’s credit analyst Vera Chaplin said borrowers in more severe arrears may find it more challenging to restore their position in a rising interest rate environment.
The Reserve Bank of Australia has lifted interest rates six times in the tightening cycle.
Chaplin said since October the interest rate rises have added about $300 a month to the average monthly repayment cost on a $300,000, 25-year loan.
Chaplin said that arrears in Residential Mortgage Backed Securities which are packaged by banks to on-sell to institutional clients will remain in the higher range as interest rates increase and borrowers struggle to adjust.
S&P’s findings support Fujitsu Australia and NZ’s March 2010 Mortgage Stress-O-Meter which shows severely stressed households (those facing a potential sale or foreclosure, or forced refinance) rose by a further 1.6%, driven by interest rate rises and cost of living increases.
And at least 222,000 households are still at risk of having to sell, refinance or lose their homes. Defaults in this 12 month period are estimated at 28,000.
Fujitsu’s report has not taken into account the April and May interest rate rises.
Australian Property Journal
