Mortgage Arrears Rise to Record highs - Sydney Morning Herald 19-6-08
Australia's mortgage arrears rate rose to a record in March as borrowers struggled to make repayments because of rising inflation and higher interest rates, according to Standard & Poor's.
Payments more than 30 days late on so-called prime loans increased to 1.45% of mortgages used to secure bonds, from 1.37% in January, S&P said in a report.
Australia's central bank has increased the nation's benchmark lending rate four times since August to a 12-year high of 7.25% to cool the fastest inflation in 17 years. Banks have raised interest rates by greater amounts at the same time that housing affordability is at a three-decade low.
''The outlook for the property market is mixed with the population-driven shortage in the housing market cushioning any downward pressure on property prices,'' S&P analysts led by Vera Chaplin wrote in report. Mortgages are remaining in arrears for longer and losses are increasing, it said.
Arrears on subprime loans in residential mortgage-backed securities, as measured by S&P's SPIN index, rose to 14.66% at March 31 from 12.29% in December last year.
Housing affordability
About 1.1 million Australians are paying more than 30% of their income in rent or home-loan costs, Prime Minister Kevin Rudd said in a speech on March 3.
A housing affordability committee has recommended Australia consider a government-backed mortgage agency similar to the Fannie Mae in the US, according to a report tabled in parliament in Canberra yesterday.
A state-backed lending agency, AussieMac, would leverage the government's top AAA rating to buy home loan-backed securities and repackage them as low-cost mortgage bonds to be sold to investors. It would boost liquidity and enable smaller operators to fund their mortgage borrowings, the committee said.
