More home owners in mortgage arrears

THE number of homeowners getting behind in their mortgage repayments rose in the first quarter, according Fitch Ratings.

More home owners in mortgage arrears

THE number of homeowners falling behind in their mortgage repayments rose in the first of this year, according to credit agency, Fitch Ratings.

But Fitch said the delinquency levels were still low by international standards.

In its first quarter report on the performance of the Australian residential mortgage market, Fitch said 30-plus day delinquencies on prime mortgages - where borrowers have met traditional lending criteria - rose to 1.31 per cent in the quarter, from 1.07 per cent at December 31, 2007.

But the agency continued its overall positive outlook for Australia.

"It is not surprising to see an increase in delinquencies in the first quarter of any year, as Christmas credit spending impedes some borrowers' ability to meet their mortgage repayments,'' Fitch said.

"This year, however, we've had the added impact of interest rate rises - data to end March 2008 includes the first signs of the impact of the August and November Reserve Bank of Australia (RBA) interest rate rises and the other interest rate rises implemented by banks in January outside of the RBA changes.''

The agency said 30-plus day delinquencies for low-doc loans had increased more significantly from 4.12 per cent from 4.98 per cent in the first quarter.

It said low doc loan arrears continued to diverge from full documentation loan arrears.

"Fitch expects Australian mortgage delinquencies to continue to increase over the next six months as interest rate rises from February and March have yet to feed through into mortgage delinquency statistics,'' the ratings agency said.

The index covered four categories of delinquencies, being 30 to 59 days, 60 to 89 days, 90-plus days and 30-plus days, as well as claims against lenders' mortgage insurance (LMI).