Mortgage delinquencies are set to rise in 2010 as borrowers battle rising interest rates and Christmas-induced credit card bills says global ratings agency Fitch.
Home loans in arrears by more than 30 days increased across all borrower categories during the December 2009 quarter. Arrears on mortgages held by non-conforming, low-documentation borrowers spiked more than 50 per cent on the September quarter as the impact of three consecutive interest rate rises kicked in.
“Further deterioration is expected” says a Fitch representative. Further interest rate hikes, combined with continued global instability and the risk of rising unemployment in Australia, were expected to push arrears higher in 2010.
Christmas seasonal credit card spending is also expected to add pressure to arrears outcomes.
Prime conforming mortgages make up the vast majority of mortgages in Australia, and arrears over 30 days declined by 0.02 per cent in the December quarter to 1.19 per cent.
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Article excerpts smh.com.au
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